Southwest has a longstanding dedication to preparedness and emergency response. As part of our preparedness mission, we provide resources to plan for and respond to emergency events with confidence and compassion to care for our Employees, Customers, and communities.
Throughout the years, our proactive planning and readiness has helped us handle many different kinds of emergencies. We have Emergency Response Plans in place for aircraft accidents, weather disruption events, natural disasters, terrorism, and infectious disease outbreaks. While we never wish to enact such plans, knowing we have them in place gives us peace of mind and helps us respond quickly in emergency situations, like the COVID-19 pandemic.
It’s no secret COVID-19 brought the travel and tourism industry to a standstill and affected every related business—from hotels and entertainment events to restaurants and (of course) airlines. Following the first reports of possible COVID-19 cases in the U.S. in January 2020, Southwest pulled together a Disaster Response Team and began to coordinate with the U.S. Centers for Disease Control and Prevention (CDC) and other health organizations to develop a plan for how to best protect our Employees and Customers.99) Select Disaster Response Team Members began meeting and planning in January of 2020. The Disaster Response Pandemic Plan was activated in March of 2020.
Throughout the pandemic, the Team has diligently met and stayed in touch with government entities, and we continue to evaluate our policies and procedures based on public health guidance, scientific research, and advice from medical and aviation organizations. Some of our earliest policies and procedures were implemented in early March. To support our Customers, we launched resources like the Southwest Promise, and to further support our Employees, we began making operation-wide adjustments, such as canceling non-essential face-to-face meetings, requiring face masks to be worn in all work locations, and implementing physical distancing.
As the pandemic is ever-evolving, the entire Southwest Team has tirelessly responded and adapted.
Keeping Our Employees Informed
Throughout the COVID-19 pandemic, Southwest has continued to monitor information from the CDC and partner with medical experts to make informed decisions. We want Employees to be equipped with accurate and timely information to perform their jobs safely while exhibiting the warm Southwest Hospitality for which we are known. To keep our Employees informed in the face of a constantly evolving situation, we regularly communicate with all of our Employees via internal communication channels like SWALife (our internal intranet) and other department-specific channels.
In addition to his longstanding weekly podcast, our Chairman and CEO Gary Kelly issued more than 50 video messages to our Employees in 2020, providing updates from the very top on the situation at hand, explaining the reasons for newly adopted operating procedures, and providing strategic business updates. This informative communication format is one we are still producing for our Employees today.
All Hands on Deck Approach
Part of weathering the COVID-19 pandemic has entailed keeping our costs low as we wait for travel demand to recover. Southwest has proudly avoided furloughs in its nearly 50-year history—an astonishing feat in and of itself that was thanks in part to the passing of the Federal Government’s Payroll Support Program (PSP) extension in December 2020, and the hard work of our Employees. As a result of the PSP extension, we do not anticipate the need to conduct any furloughs or pay cuts during 2021.1010) The 2020 Southwest Airlines One Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the Company’s environmental sustainability beliefs, plans, and expectations; (ii) the Company’s plans, goals, objectives, and initiatives related to diversity, equity, and inclusion; (iii) the Company’s plans and expectations with respect to Employee training, development, benefits, (including post-retirement benefits) pay, and staffing (including with respect to avoiding furloughs or pay cuts); (iv) the Company’s Vision; (v) the Company’s network plans, expectations, and opportunities, including factors and assumptions underlying the Company’s plans and expectations; (vi) the Company’s initiatives and related goals with respect to global distribution system access and related alliances and capabilities; (vii) the Company’s financial position, outlook, plans, strategies, goals, targets, and projected results of operations; (viii) the Company’s fleet plans and expectations; and (ix) the Company’s initiatives and expectations with respect to fuel efficiency and emissions. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the extent of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, including through any new variant strains of the underlying virus; the effectiveness and availability of vaccines; the duration and scope of related government orders and restrictions; the duration and scope of the Company’s actions to address Customer and Employee health concerns; the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company’s related business plans and decisions; and any negative impact of the COVID-19 pandemic on the Company’s access to capital; (ii) the impact of fears or actual outbreaks of other diseases, economic conditions, fuel prices, extreme or severe weather and natural disasters, fears of terrorism or war, actions of competitors, consumer perception, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results; (iii) the impact of governmental actions and governmental regulations on the Company’s plans, strategies, and operations; (iv) the Company's dependence on Boeing with respect to the Company's fleet order book and delivery schedule; (v) the Company’s dependence on other third parties for products and services, in particular with respect to global distributions systems and related alliances and capabilities, and the impact on the Company’s operations and results of operations of any third party delays or non-performance; (vi) the Company’s ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives; (vii) the impact of labor matters on the Company’s result of operations, business decisions, plans, and strategies; and (viii) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020.
Avoiding furloughs in 2020 can largely be attributed to our incredible Employees. Our Employees redoubled their efforts to cut non-essential spending and reduce costs and were excited to try new ideas, such as offering cargo-only charter flights for the first time in Company history. In true Southwest Spirit, our People are always eager to make a difference, and many asked the question, “How can I help the Company during these times?” Thousands upon thousands of our Employees stepped up to help Southwest weather this storm. Whether it was sharing and executing cost-saving ideas, helping fill needs in other departments, or sharing information about the Southwest Promise with friends and families to encourage travel, our Employees were there to help.
Another way our Employees supported Southwest was by participating in different voluntary programs, like the Voluntary Separation Program 2020 (VSP). This option provided departure packages for Employees who wished to permanently separate from the Company. We also offered eligible Employees the opportunity to take Extended Emergency Time Off (ExTO). Approximately 15,000 Employees, representing 25% of our workforce, participated in one of these voluntary programs. These crucial programs reduced our annual 2020 salaries, wages, and benefits expense by approximately $565 million.
Many Employees who couldn’t take 6, 12, or 18 months through ExTO could still consider taking a calendar month of Emergency Time Off, or ETO. With ETO, Employees maintained benefits not typically offered during a leave of absence (e.g., Travel Privileges). In addition, Time Off Without Pay (TOWOP) and Leave Without Pay (LWOP) could be taken in smaller time increments. Between March 2020 and December 2020, the ETO, TOWOP, and LWOP programs accounted for a savings of approximately $265 million. The voluntary efforts many Employees took, like ETO, ExTO, LWOP, TOWOP, and the VSP helped tremendously to adjust staffing in light of the reduced travel demand.
We’re a Family at Southwest, so seeing the largest departure of Employees at one time in our history due to VSP was tough, but it was the right option. We were grateful to have the resources to offer our People the most generous voluntary program in our history, even in these difficult times. Our Hearts will always be with those Employees who helped Southwest by taking the VSP; they will forever be a part of the Southwest Family.
Starting in March, many of our Corporate Campus and Customer Support and Services Employees began working remotely. Internally, this required some quick adjustments to implement an updated work from home setup and platform so our Employees had the right tools and resources to do their jobs. Many departments, workgroups, and Teams pivoted from in-person events and activities to virtual. From department-wide meetings to Team celebrations, many of our Employees embraced the opportunity to utilize technology and get together virtually to stay connected during this time!
Southwest Airlines University (SWA U), which provides training and development opportunities for all Employees, also had to quickly pivot how it supports our Employees. Like many public schools and universities around the country, we canceled in-person classes and transitioned to a virtual learning model—all in a matter of days. Topics traditionally taught in a classroom are now available online. Additionally, a wider range of learning content is now immediately accessible, providing a more efficient experience than traditional in-person offerings as Employees can now complete the curriculum on their own time.
Employees Supporting Employees
Since its inception in 1990, the Southwest Airlines Employees Catastrophic Assistance Charity (SWAECAC, or the Charity) has offered support to countless Employees suffering financial hardships resulting from a catastrophic event in their lives. Operating as a separate entity from Southwest, this 501(c)(3) nonprofit organization has its own Board that consists of Employees from across our Company. This Board reviews applications for financial assistance and, since its inception, has awarded more than $15 million to Employees and their families in need. The bulk of SWAECAC’s financial support is thanks to the generosity of Employee contributions, private donations, department fundraisers and events, and various other fundraisers throughout the year—really making it an initiative that supports Employees, by Employees.
In May 2020, the COVID-19 pandemic continued to cause unexpected hardships for many people around the world, including some of our Employees and their immediate families. In response, SWAECAC made a COVID-19-specific grant relief opportunity available for our Employees. The purpose of the grant was to provide support due to loss of income as a result of the economic effects of the pandemic and to help offset related financial hardships. Applicants were required to substantiate pandemic-related hardship—for example, financial strain due to loss of employment or furlough of a spouse/partner.
The Charity continued to accept and review the standard applications for Personal Hardship, Disaster Assistance, and Natural Disaster Urgent Assistance. COVID-19 relief was just an additional way Employees could seek supplemental support during these trying times. In August, the Charity also transitioned to an online application process, helping improve both the application experience for Employees and operational efficiencies of the Charity. Over the course of 2020, the SWAECAC awarded more than $489,000 in grants to support our Southwest Family in need.