‘A gut punch’: United Airlines to lay off up to 36,000 U.S. employees in October as travel remains depressed

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United Airlines warned employees for months that mass layoffs loomed if travel didn’t rebound, and the airline put a grim face on the expected tally Wednesday.

In a memo to employees, the Chicago-based airline said 36,000 employees, or 45% of its front-line workers in the USA and more than a third of its overall workforce of 95,000, face layoffs on or around Oct. 1. The most affected groups: flight attendants and airport customer service and gate agents, which account for 26,000 of the 36,000.

The airline calls them involuntary furloughs because most of the affected employees will be eligible to be recalled when travel demand returns under terms of their union contracts.

Airlines are prohibited from laying off workers until Oct. 1 under the payroll protection provisions of the federal Coronavirus Aid, Relief and Economic Security Act.

United received a $3.5 billion grant and $1.5 billion loan for payroll protection. The program was designed to stabilize airlines and keep workers employed until they could shrink their businesses to the travel reality brought on by the coronavirus pandemic.

United executives said in a briefing with reporters that they hope the final tally, which will be known in mid- to late August, will be less than 36,000 as more employees accept voluntary exit programs. The airline extended the application window for its voluntary separation program to July 15 to encourage more employees to sign up. The 36,000 does not include 1,400 previously announced layoffs of management and administrative employees.

“After months of aggressive cost-cutting and proactive capital-raising, today we updated employees about a topic we’ve always dreaded and the action that was always a last resort in the context of this COVID-19 pandemic: involuntary furloughs,” the statement began.

It continued, “The reality is that United simply cannot continue at our current payroll level past October 1 in an environment where travel demand is so depressed. And involuntary furloughs come as a last resort, after months of company-wide cost-cutting and capital-raising.”

The airline had to put a number on the cuts because of federal requirements to warn employees about mass layoffs.

United’s flight attendant, pilot union leaders react

Sara Nelson, president of the Association of Flight Attendants-CWA, which represents United flight attendants, called the numbers a “gut punch” but praised United for offering a realistic outlook.

“COVID-19 is an unprecedented threat to aviation workers and the entire U.S. aviation industry,” she said in a statement. “This crisis dwarfs all others in aviation history and there’s no end in sight. Demand was just barely climbing back to 20% of last year and even those minimal gains evaporated over the last week due to surging COVID-19 cases across the country.”

Her union called for a six-month extension of payroll protection for the aviation industry, given the dire straits, but United officials said they can’t count on more help from Washington, especially in an election year.

Ken Diaz, president of the United Master Executive Council of the AFA, called the projected number of flight attendant cuts “overreaching, excessive and punitive” in an email to flight attendants.

“It is not commensurate to United’s peers in our industry or with other work groups on the property, nor realistic with the anticipated staffing we will require to adapt and grow our airline back in the months to come,” Diaz said. 

He suggested United issued eye-popping potential layoff numbers in a bid to scare flight attendants and other affected to workers into accepting early retirement, extended unpaid leave and other voluntary programs.

“The number United has given us is staggering, but make no mistake, it is my opinion the number is so high to create panic and erode our resolve to think smart and make good decisions,” Diaz said.

He said the union will work to “uncover every stone” in its bid to cut the number of layoffs.

“We will reduce this number and we will not rest until we have done every single thing in our power to avoid even one involuntary furlough,” Diaz said.

United said it could lay off up to 2,250 pilots as part of the 36,000 layoffs. Capt. Todd Insler, chairman of the United chapter of the Air Line Pilots Association, said in a statement that the union hopes to reduce that figure with a voluntary early retirement program under negotiation with the company.

“Furloughing employees is corporate triage with a terrible impact on thousands of United families,” the statement said. “ALPA is doing everything we can to support our fellow pilots, and we expect to have agreement on several voluntary programs which will mitigate these furloughs.”

United is not alone

The coronavirus crisis crushed airlines, and the forecast for recovery has weakened during a surge in cases and new quarantines in states trying to keep out visitors from hot spots.

Airlines for America, the industry trade group, said passenger traffic won’t rebound to 2019 levels before 2023. Industry revenue, which is tied to ticket prices, will take even longer to recover, the group said.

Tuesday, United said in a securities filing that a surge in coronavirus infections in several states and traveler quarantines issued by New York, New Jersey, Connecticut and Chicago weakened travel demand – so much so that it pared back August flights it announced a week ago.

United is far from alone in sounding layoff alarms.  American Airlines CEO Doug Parker said the airline will have “more employees than it has work for” in the fall if business doesn’t improve, and Southwest Airlines CEO Gary Kelly told employees in a video this year that it will be a “drastically smaller” airline if travel doesn’t rebound by the summer.

S: USA TODAY


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