Southwest Airlines' incoming CEO says carrier will cut flights next year if staffing falls short

Southwest Airlines customers suffered hundreds of cancelations, delays and other disruptions this summer as the carrier struggled with snowballing problems of bad weather and a lack of staff.

Its next CEO, Bob Jordan, vowed not to repeat that. The airline is about halfway to its goal of hiring 5,000 workers this year and has already trimmed its schedule for the rest of 2021 to avoid further service shortfalls. The airline, and others like Spirit and American, set out to operate an ambitious schedule over the summer to try to recover revenues lost during the coronavirus pandemic, but a shortfall of staff exacerbated operational issues.

“The next question is the March schedule. We plan to meet that but if we find ourselves not able to hire to meet that we’ll go back and look at modifying the schedule,” Jordan said in an interview on Thursday. “What we’re not going to do is we’re not going to repeat last summer.”

Jordan, who takes the reins from Gary Kelly in February and is a 33-year Southwest employee, told the Skift Global Forum in New York earlier Thursday that the carrier also plans to add 8,000 employees next year. The Dallas-based airline has about 56,000 employees.

Hiring has been a challenge.

“We’re pulling out every stop,” Jordan said. The airline raised starting pay to $15 an hour and has been offering retention bonuses, referral bonuses as well as additional pay for certain markets with higher costs of living like Denver, he said.

Jordan said he was confident that it could reach its goal to add 5,000 workers this fall, but noted competition has been brutal. Employers from retailers to airlines to restaurants have struggled to fill jobs and turned to bonuses and higher pay to attract workers.

“You see 15 bucks [an hour] at Lowe’s and at McDonald’s,” he said. “The market sets the rate and I’m not sure it’s completely done yet.”

Jordan told Skift earlier that the carrier usually receives 42 or 43 applicants per open position and is now seeing about 14.

Southwest in August cut its third-quarter revenue outlook, citing weaker bookings during a rise in delta-variant cases of Covid-19.

“The holiday bookings are holding up really well,” Jordan said. “It feels like we are on the backside of this delta wave.”

Southwest and other airlines have been trying to ensure their own staff are vaccinated against Covid-19. United Airlines has the strictest policy: an outright mandate for its 67,000 U.S. employees that requires them to be inoculated, with few exceptions, or face termination. Delta Air Lines in November plans to impose a $200-a-month surcharge on company health insurance for unvaccinated employees.

Southwest is currently offering incentives like two days of pay for employees who upload proof of vaccination. Jordan told CNBC he would prefer to use incentives and not issue a vaccine mandate.

“I know the topic of vaccines and mandates are personal, it’s emotional but at the end of the day we need to get as many people vaccinated as possible, as a country, as a company,” he said. “I’d much rather get there through incentives and encouragement and data than a mandate. I would love for our employees to have a choice.”

However, a government vaccine mandate for large employers as well as government contractors, could change that. Southwest fits both categories because it operates charter flights for the government and other services.

“There’s a lot to learn about what the rules are,” he said.

Jordan said it isn’t clear yet what percentage of staff is vaccinated but the new incentives would provide more data. He guessed the company’s rate of fully vaccinated employees mirrors the national average, which is just more than 64% of the U.S. population over the age of 12. “I’m hopeful with the incentives we get to something much higher than that,” he said.