TWU Local 556 Negotiating Committee Update #32

Your Negotiating Committee took your voice to the table in a meeting with the Company on October 20, 2020 to discuss the Company’s request for concessions and the threat of furloughs that the Company has referenced to you, our Members. 

30-second summary:

• In following the proper procedures of negotiations, your Union requested that the Company officially present the proposals referenced via email at the bargaining table. In addition to following process, this allowed the Union to ask questions about the two concessionary proposals the Company had previously presented directly to Members.
• Your Union asked for specifics on how the Company expects a 10% reduction in pay to off-set furloughs, and also how Members’ contributions in terms of the large percentage of Members who took a VSP or participated in an ExTO program factored into the Company’s request to reduce your compensation.
• Additionally, your Union questioned what the on-board sales in the second option set forth by the Company would entail. Your Union inquired as to how the 5% off-set the Company referenced was calculated, especially in light of comments that the program would be a permanent change. Despite having proposed this option, the Company admitted it did not have specifics about an onboard sales program. 
• Your Union rejected the proposed pay concessions.
• Your Union presented the Company with a letter of agreement, in which the Company would agree to acknowledge the financial contributions Flight Attendants have already given by participating in the VSP and ExTO programs, not to mention the sacrifices of those who are continuing to fly the line in the midst of this pandemic. The agreement was rejected by the Company with little consideration.
• Today, your Union meets with the Company again and will present defined options that can help avoid the lack of available flying, as well as avoid concessions and furloughs.

Full Recap:

Over the past couple of weeks, Members have received communications directly from the Company about its request for concessions and the threat of furloughs. Simply put, the Company should be negotiating at the bargaining table with the TWU Local 556 Negotiating Committee instead of bypassing us and going directly to our membership. Your team met with the Company yesterday, October 20, 2020, to hear those proposals and have the opportunity to ask the many questions Flight Attendants have had regarding this information from the Company. 

First, your Union asked for specific numbers related to how a 10% pay cut would impact the overall financial picture of the airline, and also how the incredible outpouring of support from Members who had already participated in the Company’s VSP and ExTO programs factored into the situation. Your Negotiating Committee declined to sign non-disclosure agreements (NDAs), citing that transparency with Membership is of paramount importance. In response, the Company indicated it would be unable to show its forward-looking financial scenarios. The Union is open to considering a narrowly-tailored NDA to allow our economist to review this information, but the team will not sign broad NDAs that would restrict our ability to communicate openly with our Members.

The proposal regarding a 5% pay cut that also included instituting onboard sales was also discussed. Your Union asked many questions around what items or services would be included and what would be required of Flight Attendants. The Company referenced that credit cards would likely be a portion of the sales program, but had no definitive details around the program. The Union asked how the Company arrived at assigning those programs a value of 5% if the programs hadn’t been created. The Union also pointed out that there is language in the Collective Bargaining Agreement (CBA) that allows for the negotiation of onboard sales programs, so the Company has the ability to propose options that must be negotiated. The Company also noted that the onboard sales program would be a permanent change to the contract, regardless of any return in customer demand. The Union asked the Company to see a proposal outlining the details of the program they have referenced, and to understand how a program like that would generate enough immediate revenue that the Company says it needs to save quickly.

Your Union also discussed extensively the contributions already made by Flight Attendants, both before and during the pandemic, in light of cost savings for the airline. Line averages are down due to overstaffing for the MAX 8, and Members have already experienced lower paychecks due to line valuations and availability of work starting in 2019 when profits were up and shareholders reaped the benefits. In April, near the beginning of the pandemic, the Company created programs while refusing to work collaboratively with the Union. Despite that refusal, Members stepped up more than any other work group, with a large percentage of TWU Local 556 Members taking either a VSP or ExTO program to help the Company they love. Now, while Flight Attendants are serving on the front line of the pandemic, they are doing so with limited opportunities to earn what they have before, while the Company is asking for pay concessions that would result in a further reduction to their paychecks. It was pointed out that 10% pay cut looks a lot different to a line Flight Attendant than it does to a multi-billion-dollar corporation. It was also noted that Southwest Airlines refused to take billions of dollars in government loans on offer because, as Gary Kelly himself noted, the terms were “pretty onerous,” and included limiting stock buybacks and executive compensation, and government warrants. In a regulatory filing on August. 19, 2020 Southwest said that “as a result of the significant actions taken by the company to bolster liquidity and its belief that it can secure additional financing at favorable terms, if needed, the company has since decided not to participate in the secured loan program.” Yet, having left billions in federal loan dollars on the table, the Company now seeks savings on the back of hard-working Flight Attendants.

In a proactive measure to move the bargaining process forward, your Union presented to the Company a Letter of Agreement, which you will find below. Unfortunately, the financial details contained in this proposed agreement cannot be shared due to a previously signed non-disclosure agreement (NDA). In the text of this letter, however, you will see that your Union asked for the Company to recognize the sizable savings Flight Attendants have already helped the Company realize:

Southwest Airlines Co. (the “Company” or “Southwest”) and Transport Workers Union Local 556 (the “Union”) (collectively the “Parties”) recognize the global public health crisis and associated economic issues created by COVID-19, and the Company’s desire to offer cost savings initiatives to the Flight Attendants in response thereto. As a direct result of the COVID-19 pandemic, the Company has indicated it has experienced an unprecedented lack of demand resulting in a financial crisis with unacceptable and unsustainable cash burn.

Due to the COVID-19 pandemic, the Company introduced, on or about June 1, 2020, a voluntary 2020 Extended Time Off (ExTO) Program and a Voluntary Separation Program 2020 (VSP) intended as cost savings initiatives.  In response to these Programs and in an effort to preserve jobs and reduce cash burn, approximately thirty-two percent (32%) of all Southwest Flight Attendants participated in the Company’s ExTO and VSP offerings.  In addition, Southwest has realized savings from TWU Local 556’s member’s voluntary participation in ETO, TWOP, MRT, and DRT programs in 2020.  As a result of the overwhelming participation of Flight Attendants in these Company Programs, Southwest will realize a total savings in 2020 through 2021 of [redacted].

Based on the realized salaries and wages savings to date, along with the future savings to be realized from continued Flight Attendant participation in the Company Programs referenced herein, the Company agrees that no Flight Attendant will be furloughed and the Flight Attendants covered by the Parties’ collective bargaining agreement (CBA) will not be subject to any further request(s) by Southwest for wage or work rule concessions prior to January 1, 2022.

IN WITNESS WHEREOF, the parties agree to execute this Letter of Agreement as of October _____, 2020:

________________________________
Brendan Conlon, Labor Relations
Southwest Airlines, Co.

_______________________________
Lyn Montgomery, President
TWU Local 556

 The Company immediately rejected the letter.

Simply put, concessions and/or furloughs are not the answer, and the Union is not willing to allow the Company to finance liquidity for Southwest Airlines and its shareholders at such a grave cost for Flight Attendants. However, TWU Local 556 has solid, mutually beneficial solutions that can prevent concessions and furloughs. 

The Negotiating Committee is meeting with Southwest Airlines today, October 21, to present current contractual methods that would improve available flying, address overstaffing, and avoid both concessions and furloughs. These options would allow our Members the opportunity to volunteer, rather than be forced, to create the cost savings the Company says it needs. Your Union looks forward to engaging in a bargaining process that follows proper procedures.