A United Airlines kiosks at San Francisco International Airport, San Francisco, the US, July 8 2020. Picture: JUSTIN SULLIVAN/GETTY IMAGES
A United Airlines kiosks at San Francisco International Airport, San Francisco, the US, July 8 2020. Picture: JUSTIN SULLIVAN/GETTY IMAGES

New York — United Airlines Holdings on Wednesday notified 36,000 employees, or 45% 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 finalised and may be smaller as workers weigh offers to leave voluntarily, United told employees. The planned furloughs include about 15,000 flight attendants, 11,000 customer service staff and 5,500 maintenance employees. About 3,700 workers have already taken voluntary retrenchment packages.

United’s warning signals the depth of potential job losses at US airlines later in 2020, even after the federal government provided $25bn in payroll support plus another $25bn available in loans. The carrier told employees on Monday that state quarantines prompted by a jump in coronavirus infections were jeopardising a nascent US travel recovery. United expects that travel demand will 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 fell 3% to $31.55 in New York amid broad declines at US airlines. United shares have tumbled 63% in 2020, the biggest drop on a Standard & Poor’s index of major carriers.

Seniority and performance

Workers represented by union contracts will be furloughed based on their seniority, while management employees will be culled based on their performance and job-specific needs, United executives said. Those who are cut will be given the option to return to their jobs whenever travel demand returns and additional labour is needed.

The proposed furloughs 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% 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, 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 furloughs in October.

United’s rivals are also studying major job cuts. Last week, American Airlines said it would have in excess of 20,000 more employees than it needs to operate a reduced flying schedule later in 2020. Delta Air Lines said in June it would inform almost 2,600 pilots about a possible furlough and encouraged a total of 7,900 eligible aviators to accept early retirement.

Airlines are restricted from mass layoffs until September 30 under the terms of federal aid, which is part of the $2-trillion Cares Act.

The industry’s major job cuts are expected to commence on October 1, roughly a month before the US presidential election. That dynamic has raised the prospect that Congress may decide to extend payroll-support measures to avoid tens of thousands of job losses. Some airline unions are using the prospect of mass layoffs to press for additional funds.

Bloomberg

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