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CEO says Southwest needs union pay cuts to avoid furloughs

FILE - A Southwest Airlines jet takes off from Love Field in Dallas, Wednesday, June 24, 2020. Southwest Airlines says its workers must take pay cuts or face furloughs next year. CEO Gary Kelly said Monday, Oct. 5, 2020 that Southwest needs to cut spending sharply or risk losing billions of dollars every three months. (AP Photo/Tony Gutierrez)
FILE - A Southwest Airlines jet takes off from Love Field in Dallas, Wednesday, June 24, 2020. Southwest Airlines says its workers must take pay cuts or face furloughs next year. CEO Gary Kelly said Monday, Oct. 5, 2020 that Southwest needs to cut spending sharply or risk losing billions of dollars every three months. (AP Photo/Tony Gutierrez) (Copyright 2019 The Associated Press. All rights reserved.)

DALLAS – Southwest Airlines will cut pay for nonunion workers in January and says union workers must also accept less pay or face furloughs next year as the pandemic continues to hammer the airline business.

Chairman and CEO Gary Kelly said Monday that unless the federal government gives airlines more money, Southwest will have to sharply cut spending to avoid losing billions of dollars every quarter until a coronavirus vaccine is widely available. Air travel is down nearly 70% from a year ago.

“We would have to wipe out a large swath of salaries, wages and benefits to match the low traffic levels to have any hope of just breaking even,” Kelly said in a video to employees.

Union officials said the company should find options other than pay cuts.

Southwest, the fourth-biggest U.S. airline by revenue, recently said it is burning about $17 million a day. It lost $915 million in the second quarter and borrowed billions while cutting back on flights to conserve cash.

Kelly said he won't get a base salary through 2021 and non-union employees will see a 10% pay cut Jan. 1 to avoid layoffs through 2021. Southwest will negotiate similar cuts from union workers, who represent about 85% of the workforce.

Southwest Airlines Co. had about 61,000 employees in June but at least 4,200 agreed to leave. At least 12,500 more took long-term leaves of absence.

Pay for union pilots, flight attendants, mechanics and ground workers are governed by long-term contracts, but Kelly wants “reasonable concessions" by Jan. 1.