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 loan 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 a 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.
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."
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The 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.
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 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.
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