Rajesh Kumar Singh
CHICAGO (Reuters) – Southwest Airlines (NYSE:) plans to offer its pilots reduced hours and essentially a monthly salary, two people familiar with the matter said, as the company faces higher costs and a bloated workforce due to delivery delays. aircraft from Boeing (New York Stock Exchange:).
The Dallas-headquartered airline, which operates an all-Boeing fleet, is struggling with the US planemaker’s ongoing safety crisis. Last week the company warned of a decline in revenue as it expected to take delivery of just 20 Boeing aircraft this year, less than a quarter of its original plans.
Southwest called the delays “major challenges” for this year and next as they forced the company to scale back its growth plans.
Reducing pilots’ hours will help reduce Southwest’s payroll without having to resort to furloughs, the people said. It is also intended to ensure Southwest pilots meet FAA requirements to remain in the cockpit, allowing the company the flexibility to ramp up standby operations when needed, they added.
The plan is likely to take effect around September and is expected to be offered to hundreds of pilots, one of the sources said.
Boeing crisis caused by the January explosion of a cockpit panel Alaska Air (NYSE:) – continues to spread throughout the industry. Airlines have been forced to adjust fleet plans, reduce capacity and deal with excess staff.
A Southwest Airlines spokesman said the company had yet to reach an agreement with the Southwest Airlines Pilots Association (SWAPA), which represents its pilots, and declined to provide more details.
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Casey Murray, head of SWAPA, said the pilots’ union had held preliminary talks with the company regarding supplies to Boeing. While the airline has not officially made a decision on staffing increases, SWAPA expects to have those discussions very soon, he said.
Southwest employs 12,000 pilots who average about 100 hours a month, according to the union. A new airline junior pilot is currently paid about $116 an hour, while a captain at the top of the pay scale is paid about $317 an hour.
Southwest plans to cut costs by ceasing operations at four airports in August and reduce its presence in markets such as Chicago and Atlanta.
The airline has also stopped hiring all but a limited number of critical roles and expects to end the year with about 2,000 fewer employees than in 2023. The airline expects headcount to also fall next year due to a further reduction in overall capacity.
Southwest has already offered voluntary unpaid leave to ground operations and call center employees and flight attendants to reduce labor costs.