United Airlines Holdings Inc has notified 36,000 employees, or 45 percent of its US workforce, that their jobs are at risk after federal payroll aid expires at the end of September.
The final layoff tally has not been finalized and might be smaller as workers weigh offers to leave voluntarily, United told employees on Wednesday.
The planned lay offs include about 15,000 flight attendants, 11,000 customer service staff and 5,500 maintenance employees. About 3,700 workers have already taken voluntary separation packages.
Photo: AFP
United’s warning signals the depth of potential job losses at US airlines later this year, even after the federal government provided US$25 billion in payroll support, plus another US$25 billion available in loans.
The carrier told employees this week that state quarantines prompted by a jump in COVID-19 infections were jeopardizing a nascent US travel recovery.
United expects that travel demand would remain weak until a treatment or vaccine is widely available.
“We are living through the most disruptive financial crisis in the history of commercial aviation,” the company said in a letter to employees. “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.”
The shares changed little at US$32.53 at the close in New York. They have tumbled 63 percent this year, the biggest drop on a Standard & Poor’s index of major carriers.
In a regulatory filing, United said it expected to book charges of about US$300 million in the second quarter to cover costs of voluntary employee separations. That would include a cash portion of about US$50 million.
Workers represented by union contracts are to be laid off based on their seniority, while management employees would be culled based on their performance and job-specific needs, United executives said.
Those who are cut would be given the option to return to their jobs whenever travel demand returns and additional labor is needed.
The proposed lay offs are “a gut punch” for United flight attendants, “but they are also the most honest assessment we’ve seen on the state of the industry,” said Sara Nelson, president of the Association of Flight Attendants-CWA, which represents 25,000 employees at the airline.
“This crisis dwarfs all others in aviation history and there’s no end in sight,” she said in a statement. “Demand was just barely climbing back to 20 percent of last year and even those minimal gains evaporated over the last week due to surging COVID-19 cases across the country.”
United is in “active discussions” with its pilots’ union, the Air Line Pilots Association (ALPA), on terms of an early retirement package for more senior aviators, a company executive said.
That could reduce the proposed 2,250 pilots who face lay offs in October.
“ALPA has been intensely focused on securing an early-out package that will mitigate furloughs [sic] by incentivizing pilots to retire early,” United ALPA group chairman Todd Insler said in a statement.
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