After Nearly 50 Years, Southwest Airlines Just Shared Some Very Good News

This past year has been so hard for so many people. In the business world, no industry has faced bigger challenges than the airlines. 

Thus, it wasn’t a shock that back in October, Southwest Airlines warned it might have to take a dire step that it hadn’t resorted to before in its 49-year history: employee furloughs.  

Southwest Airlines CEO Gary Kelly gave the warning, in a video message for Southwest employees: 

• First, he promised he would take no salary until the end of 2021, and that other top Southwest leaders would take pay cuts of up to 20 percent.
• Next, he said non-union Southwest employees would be taking temporary 10 percent pay cuts too, but that in return for that, employees would run no risk of furloughs through the end of 2021.
• Finally, he said he was asking Southwest unions — including pilots, flight attendants, and others — also to take 10 percent pay cuts, in exchange for the same promise of no layoffs or furloughs, also through the end of 2021.

Overall, Kelly said, his goal was to avoid furloughs, but that unless the U.S. government stepped in, it would be up to the unions to meet him. I thought this was very shrewd; he was able to advocate against furloughs, but arguably put responsibility for them, if they happened, on the unions.

Now, while I feel for anyone who gets laid off or furloughed in almost any instance, it got me thinking about other tough times in airline history, and how Southwest had reacted then.

For example, nearly 20 years ago, the airlines faced another crisis in the wake of the terrorist attacks of September 11, 2001. Grouping Southwest with a small group of other companies that refused to consider layoffs or furloughs, BusinessWeek (now Bloomberg) wrote: 

It’s not altruism at work. Rather, executives at no-layoff companies argue that maintaining their ranks even in terrible times breeds fierce loyalty, higher productivity, and the innovation needed to enable them to snap back once the economy recovers.

And as The Washington Post noted, in the same timeframe:

Yes, this is Southwest Airlines, which is almost blithely flying onward in the aftermath of the terrorist attacks of Sept. 11. No staff layoffs, no major flight cutbacks … no dire predictions from company honchos about imminent bankruptcy. Just smiles, and free peanuts, and tremendously corny jokes.

Actually, the peanuts are gone, but the no-layoffs policy endured.

Southwest actually did get as far as issuing legally required WARN notices in November, advising of specific future layoffs. When I covered this at the time, I closed by writing: 

I’d love to be able to write in a few months that Southwest managed to keep its 49-year no-furlough streak going.

A few months later, sure, enough, the situation was resolved — not because of union concessions, or Kelly backing down, but because (as unlikely as it seemed in October or November), the government did in fact pass another stimulus bill, including money for the airlines.

The new stimulus bill that passed the Senate over the weekend also includes additional money for airlines.

(Southwest isn’t alone in having avoided furloughs during the pandemic; Delta Air Lines managed to, also. However, United and American furloughed about 15,000 employees each during that timeframe.) 

Stepping back, this is an example of why I always suggest that business leaders in any industry should pay attention to the airlines. They’re commodity businesses, selling the same product, and endlessly trying to find ways to differentiate themselves.

Sometimes it’s by focusing on routes. Sometimes it’s by adding an extra inch of seat pitch in economy, or tweaking other small points in their pricing models. 

Sometimes, at least in Southwest’s case, it’s by finding an extra advantage in hiring and retention by trumpeting a half-century history of having no involuntary job cuts.

So, ask yourself, what’s the equivalent in your business? How do you add an extra inch to your seats, metaphorically? Or else, what’s the streak you’ve got going that you can speak a little louder about?

What’s the extra, not-easily quantifiable selling point you can use with employees, potential employees, and customers–the “positive negative” that you might not even think of immediately, but that burnished your reputation?

It might not always make short-term economic sense, but it might make great sense in terms of reputation.

It’s welcome news that Southwest was able to keep its streak going, after nearly 50 years. And, for the sake of employees, American companies, and the economy, I’m glad I get to write about it.