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United says it may furlough as many as 36,000 workers because of pandemic losses United may furlough nearly 36,000 workers despite receiving billions in federal aid
(about 2 hours later)
United Airlines announced Wednesday that despite receiving billions in federal aid, it may furlough nearly 36,000 employees Oct. 1, a scenario that one union official called a “gut punch.” United Airlines announced Wednesday that despite receiving billions in federal aid, it may furlough nearly 36,000 employees Oct. 1, a scenario one union official called a “gut punch.”
The number represents nearly 40 percent of the Chicago-based airline's workforce. The number represents nearly 40 percent of the Chicago-based airline’s workforce.
Government grants received through the $2 trillion coronavirus relief package known as the Cares Act require airlines to keep front-line workers on the job through Sept. 30. In addition to receiving $4.9 billion in government grants, United signed a letter of intent this week to accept roughly $4.5 billion in loans through the program. But company executives said with demand for air travel unlikely to return in 2020, they have no choice but to warn employees that they may be let go.Government grants received through the $2 trillion coronavirus relief package known as the Cares Act require airlines to keep front-line workers on the job through Sept. 30. In addition to receiving $4.9 billion in government grants, United signed a letter of intent this week to accept roughly $4.5 billion in loans through the program. But company executives said with demand for air travel unlikely to return in 2020, they have no choice but to warn employees that they may be let go.
“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 airline said in a memo sent to employees. “And involuntary furloughs come as a last resort, after months of companywide cost-cutting and capital-raising.”“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 airline said in a memo sent to employees. “And involuntary furloughs come as a last resort, after months of companywide cost-cutting and capital-raising.”
Under the Worker Adjustment and Retraining Notification Act, most companies with 100 or more employees must give workers 60 days notice of mass layoffs or plant closings.Under the Worker Adjustment and Retraining Notification Act, most companies with 100 or more employees must give workers 60 days notice of mass layoffs or plant closings.
What is happening at United will likely be repeated across the industry as carriers struggle to survive during the worst economic crisis in the industry history. Airline executives have already signaled they expect to emerge from the crisis with smaller workforces. What is happening at United will probably be repeated across the industry as carriers struggle to survive during the worst economic crisis in the industry history. Airline executives have already signaled they expect to emerge from the crisis with smaller workforces.
“The United Airlines projected furlough numbers are a gut punch, 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 nearly 50,000 flight attendants at 19 airlines, including United. In a message to employees in March, Oscar Munoz, then United’s chief executive and Scott Kirby, then the airline’s president, said that while taking care of employees would be their top priority, “ … if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”
United employs roughly 95,000 people worldwide. The number of furloughs could be fewer depending on how many employees take advantage of early retirement, voluntary separation or other programs, executives said. Already, more than 20,000 United employees have taken voluntary unpaid leaves of absence. The airline has undertaken other cost cutting measures. Still, despite cutbacks, United officials said the airline is still burning through $40 million a day. Still Wednesday’s announcement was a blow to employees.
Demand for travel has increased slowly, but is still far below 2019 levels. In its June forecast, the International Air Transport Association estimated that carriers worldwide would lose $84.3 billion in 2020. Revenue is expected to fall 50 percent, from $838 billion in 2019 to $419 billion this year. “The United Airlines projected furlough numbers are a gut punch, 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 nearly 50,000 flight attendants at 19 airlines, including United.
United employs roughly 95,000 people worldwide. The number of furloughs could be fewer depending on how many employees take advantage of early retirement, voluntary separation or other programs, executives said. Already, more than 20,000 United employees have taken voluntary unpaid leaves of absence. The airline has undertaken other cost cutting measures. Still, despite cutbacks, United officials said the airline is burning through $40 million a day.
Demand for travel has increased slowly, but is remains far below 2019 levels. In its June forecast, the International Air Transport Association estimated that carriers worldwide would lose $84.3 billion in 2020. Revenue is expected to fall 50 percent, from $838 billion in 2019 to $419 billion, this year.
United said even though it has begun to add flights, capacity is expected to be down 75 percent in July compared to last year. Some growth is anticipated in August, but the numbers are still expected to be down 65 percent compared to last August.United said even though it has begun to add flights, capacity is expected to be down 75 percent in July compared to last year. Some growth is anticipated in August, but the numbers are still expected to be down 65 percent compared to last August.
The recent spike in coronavirus cases in numerous states, including California, Florida, Texas and Arizona, is further diminishing hopes of a recovery with many saying demand probably won’t return to normal levels until treatment or a vaccine becomes widely available. On Wednesday, the number of confirmed infections in the United States surged past 3 million, according to data tracked by The Washington Post, and there have been more than 128,00 deaths.The recent spike in coronavirus cases in numerous states, including California, Florida, Texas and Arizona, is further diminishing hopes of a recovery with many saying demand probably won’t return to normal levels until treatment or a vaccine becomes widely available. On Wednesday, the number of confirmed infections in the United States surged past 3 million, according to data tracked by The Washington Post, and there have been more than 128,00 deaths.
AFA and other unions have called on Congress to extend payroll support offered through the Cares Act though March 31, warning that layoffs in the aviation sector will ripple through the entire economy. U.S. airlines and cargo carriers directly employ an estimated 750,000 people worldwide.AFA and other unions have called on Congress to extend payroll support offered through the Cares Act though March 31, warning that layoffs in the aviation sector will ripple through the entire economy. U.S. airlines and cargo carriers directly employ an estimated 750,000 people worldwide.
“Should October 1 arrive without extending the PSP grant job program mass layoffs are inevitable, as airline executives have acknowledged. Hundreds of thousands of workers will lose their jobs and health insurance — not only in aviation, but across our entire economy,” union officials said in a letter last month to Democrat and Republican leaders on Capitol Hill. “Airline industry employment cannot simply be put back together overnight, and mass layoffs will do great damage to the sector, with potentially irrevocable consequences.”“Should October 1 arrive without extending the PSP grant job program mass layoffs are inevitable, as airline executives have acknowledged. Hundreds of thousands of workers will lose their jobs and health insurance — not only in aviation, but across our entire economy,” union officials said in a letter last month to Democrat and Republican leaders on Capitol Hill. “Airline industry employment cannot simply be put back together overnight, and mass layoffs will do great damage to the sector, with potentially irrevocable consequences.”
Added Nelson: “Congress must extend the [Payroll Support Program] in order to avoid hundreds of thousands of layoffs from an industry that normally drives economic activity for every other sector and supports more than 11 million jobs. Failing to maintain this successful jobs program will have a ripple effect across the economy. Conversely, a clean extension of the program helps prime us for economic recovery.” Added Nelson on Wednesday: “Congress must extend the [Payroll Support Program] in order to avoid hundreds of thousands of layoffs from an industry that normally drives economic activity for every other sector and supports more than 11 million jobs. Failing to maintain this successful jobs program will have a ripple effect across the economy. Conversely, a clean extension of the program helps prime us for economic recovery.”
Delta, United signal they will take government loans under the Cares ActDelta, United signal they will take government loans under the Cares Act
Joe DePete, president of the Air Line Pilots Association, International, which represents more than 63,000 pilots at 34 airlines in the United States and Canada said: “The economic impact COVID-19 has had on the airline industry has been profound for the workers who keep our skies safe and our world connected. Unfortunately, in the past few weeks, thousands of pilots and crew members have received furlough notices and, absent congressional action, it is likely that there will be more to come.”Joe DePete, president of the Air Line Pilots Association, International, which represents more than 63,000 pilots at 34 airlines in the United States and Canada said: “The economic impact COVID-19 has had on the airline industry has been profound for the workers who keep our skies safe and our world connected. Unfortunately, in the past few weeks, thousands of pilots and crew members have received furlough notices and, absent congressional action, it is likely that there will be more to come.”
Despite the push, United executives said they aren’t counting on Congress to act on an extension. On a phone call with reporters Wednesday, United executives said they were aware of the unions’ push for an extension to the payroll support program and while they would continue to engage with leaders in Washington, they were not counting on Congress to act.
“We don’t feel like we can count on additional government support,” a United executive on the call said.
Complaints about airline service have skyrocketed during the pandemic
Of the 36,000 United employees who could be affected, roughly 15,000 are flight attendants and 11,000 are customer service or gate agents. About 1,800 catering workers, 1,000 contact center employees, 5,500 technical operations employees and 225 network operations also could be affected. Among pilots, 2,250 could be impacted.Of the 36,000 United employees who could be affected, roughly 15,000 are flight attendants and 11,000 are customer service or gate agents. About 1,800 catering workers, 1,000 contact center employees, 5,500 technical operations employees and 225 network operations also could be affected. Among pilots, 2,250 could be impacted.
“Furloughing employees is corporate triage with a terrible impact on thousands of United families,” said Todd Insler, chairman of the United Master Executive Council of the Air Line Pilots Association. “This is a direct result of the global pandemic which has affected millions around the world and nearly grounded our industry. ALPA is doing everything we can do to support our fellow pilots, and we expect to have final agreement on several voluntary programs which will mitigate these furloughs.”“Furloughing employees is corporate triage with a terrible impact on thousands of United families,” said Todd Insler, chairman of the United Master Executive Council of the Air Line Pilots Association. “This is a direct result of the global pandemic which has affected millions around the world and nearly grounded our industry. ALPA is doing everything we can do to support our fellow pilots, and we expect to have final agreement on several voluntary programs which will mitigate these furloughs.”