DALLAS (AP) — Southwest Airlines is offering buyouts to about one-fourth of its employees in an effort to cut costs as the discount carrier heads into a period of expected slower growth.þþSouthwest, based in Dallas, said Tuesday it is offering $25,000 in cash as well as health and dental benefits to 8,700 flight attendants, baggage handlers and other employees. The offer was not extended to pilots and mechanics.þþThe workers have until Aug. 10 to accept the offers, which began showing up in their mailboxes on Monday, said Brandy King, a Southwest spokeswoman. She said the company did not have a target number of job or cost reductions it hoped to achieve.þþThis is Southwest’s second recent round of buyouts. More than 1,000 employees took buyouts in 2004, Ms. King said. The company currently has about 33,000 workers, she said.þþSouthwest — which reports second-quarter financial results today — faces rising fuel costs and contract negotiations that could increase its labor costs.þþFor several years, Southwest saved money by hedging fuel purchases with options to buy fuel at set prices. But those arrangements are losing their effectiveness. Last year, the company spent $2.14 billion on fuel — its second-largest expense after labor — or 60 percent more than in 2005.þþAt the same time, Southwest’s growth appears to be slowing. The airline’s chief executive, Gary C. Kelly, said in June the company would grow about 6 percent a year, down from 8 percent, and would add fewer new planes because revenue wasn’t rising as fast as expected.þþThe airline is looking at new ways to generate revenue, including extending its United States-only service to the Caribbean by 2009 and beyond that to Europe by selling seats on flights of its partner ATA Airlines.þþSouthwest offered buyouts to nearly all employees in 2004 to help reduce staffing after the terrorist attacks of 2001 weakened demand for air travel. That offer was for up to $1,000 per year of service, and health benefits.þþMs. King said employees who were surveyed last year asked if the airline would consider another buyout, and the idea gained momentum this year.þþThe new offer was extended to employees above a certain point on the pay scale but does not correlate to specific years of service, Ms. King said.þþHigher-paid workers, including pilots and mechanics, were notably exempt from the offer. “It was cost-prohibitive for us to offer a program that would satisfy all employees,” Ms. King said.þþShares of Southwest fell 4 cents, to $15.59, on Tuesday.þþ
Source: NY Times
