With talks between the low-fare carrier and Local 555 of the Transport Workers Union at a standstill, Dallas-based Southwest moved to institute a pay raise, effective Oct. 1, that had been contained in an Oct. 3 contract proposal rejected by the union.
Any labor rancor is particularly glaring at Southwest, which Fortune magazine has frequently cited at the top of its list of the 100 best companies to work for in America.
Herb Kelleher, Southwest's chairman, chief executive and president, announced the pay increase in a letter distributed Thursday to the carrier's nearly 30,000 employees. In the letter, Mr. Kelleher said the union had not offered proposals that would move the talks forward.
"At this point, based on the actions and communications of the TWU 555 leadership, we are no longer optimistic that we will be able to reach an agreement with the TWU 555 negotiating committee in the near future," Mr. Kelleher wrote.
The union rebutted the statements in two letters posted on its Web site and on its telephone hotline on Friday and Monday. It is applying for picketing permits at all Southwest locations and running tests involving its strike preparations committee.
"There hasn't been meaningful movement by the company," said Gary Shults, Local 555's president. "We will continue to bargain in good faith with the company."
Negotiations held Oct. 3 are set to resume Oct. 31 through Nov. 3. Southwest's ramp, operations and provisioning agents have been without a contract since Dec. 6.
Two mediators from the National Mediation Board joined the talks in late September. Key issues in the current talks are pay, an attendance policy and the airline's 401(k) program.
Southwest has had only one strike in its 29-year history. An early 1980 walkout by the International Association of Machinists lasted 20 days but failed to shut down the airline because pilots and flight attendants crossed the picket lines. The strike ended when the union accepted the last contract offer made before the strike began.
The airline is not making any preparations for a possible walkout during the upcoming holiday travel season, said Southwest spokesman Ed Stewart. Before any strike could occur, the mediator would have to declare that negotiations had reached an impasse and then release both sides into a 30-day cooling off period.
"We would not have put our letter out had we thought there was meaningful movement," said Colleen Barrett, Southwest's executive vice president of customers. "We thought we had to do something."
A strike at Southwest would have much greater impact than the one 20 years ago. With the addition of West Palm Beach, Fla., to its route network in January, the airline will fly to 58 cities in the United States. In 1980, Southwest only served several cities within Texas as well as New Orleans; Oklahoma City; Tulsa, Okla.; and Albuquerque, N.M.