Southwest Airlines (NYSE:LUV) has reportedly sent furlough notices to 42 parts inventory workers, setting up what could be the first involuntary job cuts in the airline's 49-year history. Though the notice only impacts a small number of workers, the airline is likely hoping the message reverberates throughout the company.
Airlines have been scrambling to cut costs as travel demand has fallen due to the pandemic. The industry initially survived without layoffs thanks to assistance as part of the CARES Act, but as that funding, and a prohibition on layoffs that came with it, expired, a number of carriers have taken steps to reduce their workforce.
Southwest so far had been able to avoid furloughs because of the large number of employees who took early retirement or voluntary leave, but CEO Gary Kelly last month said employees would need to "sacrifice more" heading into 2021 if furloughs were to be avoided.
The decision to furlough the parts workers, which was first reported by Reuters, came after the union representing the workers refused to discuss pay cuts, according to Southwest, as reported by Reuters. The airline said the furloughs would take affect in January unless Washington comes through with a second round of payroll support.
Southwest's decision is likely a warning shot to its larger pilots and flight attendants unions, which both have rebuffed calls for further concessions. The airline is hopeful to return to the negotiating table to work out a way to cut costs without furloughs, but the move Friday is an indication that it is willing to act if a compromise cannot be reached.