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 loans 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 the 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
workgroups 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 others affected 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 the 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.