United Airlines sending layoff notices to nearly half of US employees

Marco Green
July 8, 2020

The furloughs would include 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers and 2,250 pilots. About 3,700 workers have already taken voluntary separation packages. United can't lay off workers before then as a condition of the $5 billion it got as its share of $25 billion in federal aid to help airlines cover payroll costs.

"We look forward to working with the airlines to finalize agreements and provide the airlines the ability to access these loans if they so choose", Treasury Secretary Steven Mnuchin said in a statement.

"What they're saying: "[G] iven the recent resurgence of COVID-19 cases across the country, it's increasingly likely that travel demand will not return to normal until there is a widely available treatment or vaccine", the company wrote.

"We are living through the most disruptive financial crisis in the history of commercial aviation", the company said in a letter to employees. The furloughs would happen on or after October 1, just after the no-layoff restrictions imposed by federal stimulus funds expire on September 30.

The shares fell 2.6 per cent to $31.71 at 12:20pm in NY on Wednesday amid broad declines at United States airlines. United's shares had fallen 63 per cent this year by close on Tuesday Tuesday, the biggest drop on a Standard & Poor's index of major carriers. In a filing Tuesday, United said its management held a town hall-style meeting with employees and told them capacity for June was down about 88% year-over-year, and July capacity is expected to be down about 75%.

"The reality is that United simply can not continue at our current payroll level past October 1 in an environment where travel demand is so depressed".

The big United States airline said it does not expect everyone who receives the notice to be furloughed, but emphasised that it must cut costs due a severe drop in demand. And airlines are reporting a slide in bookings for August following surges in coronavirus cases around the country, and following new restrictions on travelers coming from certain states with high case counts to NY and New Jersey.

Delta, which kicks off second-quarter airline results on July 14, said last week that it may scale back the number of flights it had planned to add in August due to the surge in Covid-19 cases.

Delta Air Lines recently told employees that it will send layoff notices to more than 2,500 of its 14,000 pilots.

Last week, the Treasury said it had agreed on the terms for government loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, with five other airlines including American Airlines.

The industry's major job cuts are expected to commence on October 1, roughly a month before the U.S. presidential election.

Most airline unions are strong, relative to other industries, and contracts tend to require airlines to offer furloughs, rather than layoffs.

United can not rely on additional taxpayer support for its business to survive and considers the job cuts necessary, an executive told reporters on a call.

Other reports by Click Lancashire

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