Southwest Airlines CEO Gary Kelly, like his counterparts at other companies stunned by the coronavirus crisis, has been fielding questions about the impact from anxious employees for almost two months.
The questions, which Kelly answers in videos sent to its 60,000 workers, have taken a sobering turn at always upbeat Southwest, underscoring the industry’s uncertain future.
“Most of my co-workers are not processing the dark and dangerous reality,” one employee said in an email, according to excerpts Kelly shared in this week’s “Ask Gary” video.
“Our messages of strength have created a false sense of security. My co-workers talk about the losses at JetBlue and Delta yet somehow don’t apply those numbers to Southwest.”
The email goes on, Kelly said, but the worker’s question was essentially this: “Just how bad are things” at Southwest?
Kelly didn’t get into financial specifics since Southwest won’t report first quarter earnings and its second quarter outlook until April 28, but he did detail the industry’s dire straits and the drastic steps Southwest will have to take if things don’t improve soon.
He braced employees for the possibility of benefit and pay cuts and the first involuntary furloughs in the company’s 50-year history but said the airline is doing everything it can to avoid that, raising billions of dollars in cash, slashing flights by more than half and parking hundreds of planes.
“Obviously, this can’t go on forever,” he said. “We can’t raise that much cash.”
Southwest and other airlines need people to start flying again as soon as possible to avoid a deeper, more painful round of cost cutting. That prospect is uncertain given stay-at-home orders still in place across the country.
“If things don’t improve dramatically over the May, June, July time period, we’ll have to prepare ourselves for a drastically smaller airline,” he said. “I am not predicting that. I am not predicting that. But life can be very humbling.”
“I have great faith that this too shall pass,” Kelly added. “I just don’t know when.”
Kelly said the first cuts Southwest will make, if necessary and in conjunction with its many unions, will be benefit and pay cuts. He said he favors pay cuts for all employees as a first step to avoid the need for involuntary furloughs.
It has been estimated that air travel recovery could take between 4 to 5 years.
At 13 1/2 minutes, this was Kelly’s longest video since the outbreak began, with most significantly shorter.
On Southwest’s future: So, what’s going to happen to us? The honest answer is I don’t know. No one knows. That’s the only honest answer anyone can provide. We’ve never experienced anything like this in our lifetimes.”
So, what is Southwest going to do? “Do we give up? Well, of course not. We fight. … And we fight like we’ve never fought before. We fight to defeat this virus. And we fight for our customers, every single one. They’re precious and we need them. And don’t ever be rude.”
On the economic carnage all around: “Many companies will not survive this, and it may be through no fault of their own. A lot of jobs will be destroyed. Institutions will be lost that took years or decades to build. … But Southwest is too precious to lose. All of us, we are the stewards and the protectors of what’s been built over 50 years and must guard this treasure that has been entrusted to us with all our might.”