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Southwest Airlines, facing what it says is likely 30 percent less passenger traffic this fall compared to last year, is offering a buyout package to employees in order to cut its workforce.

Gary C. Kelly wearing a suit and tie sitting at a table: Southwest Airlines CEO Gary Kelly © Southwest Airlines Southwest Airlines CEO Gary Kelly

The news was first reported by the Dallas Morning News.

“Given our current situation, my No. 1 goal is to protect the future of Southwest Airlines and do my best to provide job security for our employees,” Southwest CEO Gary Kelly said in a letter to employees regarding retirement and leave options. “It is clear that for the near future we are currently overstaffed. It’s imperative that we bring our employee numbers down, voluntarily.”

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Airlines are coping with the effects of the coronavirus, which at one point in April had dwindled air traffic to just four percent of what it was a year ago. Demand is still off between 80 and 85 percent and many airlines are planning or have executed dramatic cuts.

According to the paper, most Southwest employees with more than 10 years at the company would get a year’s pay and four years of flight privileges if they opt for early retirement. Pilots would get paid about two-thirds of their average salary for five years or until they hit 65, whichever comes first. Early retirees would also get a year of company-paid health insurance.

It was described as the “most generous buyout package in our history.”

“Even with these offerings, we can’t guarantee that we won’t have to lay off or furlough employees in the future,” the Southwest document said. “We are offering this program to take voluntary steps first.”

Employees have until July 15 to apply for the programs.

“Heading into the fall, we have planned to reduce our capacity by about 30 percent,” Kelly said. “While this number may change, that is our current plan. While overstaffing isn’t tied 100 percent to capacity levels, it would be fair to assume that we are overstaffed in many areas at a similar percentage. We can take meaningful measures to cut our spending and conserve cash as much and as quickly as possible.”

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