United Air­lines might trim nearly half of U.S. em­ploy­ees

Chicago Sun-Times - - BUSINESS - BY DAVID ROEDER, BUSINESS & LA­BOR REPORTER droeder@sun­times.com | @Roed­erDavid

United Air­lines said Wed­nes­day up to 36,000 of its front­line U.S. em­ploy­ees, or about 45% of its do­mes­tic work­force, could lose their jobs Oct. 1.

The car­rier said the af­fected em­ploy­ees will get a no­tice of what it called “in­vol­un­tary fur­loughs” ei­ther from the com­pany or a union rep­re­sen­ta­tive. With the an­nounce­ment, Chicago-based United be­comes the first ma­jor U.S. air­line to de­tail a mas­sive down­siz­ing be­cause of the business de­cline re­lated to the coro­n­avirus.

The ad­vi­sories are be­ing given un­der the fed­eral Worker Ad­just­ment and Re­train­ing Act, or WARN, which re­quires a 60-day no­tice of large-scale lay­offs or fur­loughs. United said not ev­ery­one who gets a no­tice will be forced out; com­ply­ing with the WARN act gives the com­pany the right to cut the work­ers if it must.

“We ex­pect to off­set th­ese num­bers through in­creased par­tic­i­pa­tion in new and ex­ist­ing vol­un­tary pro­grams as well as con­tin­ued dis­cus­sions with our union part­ners about cre­ative ways to help re­duce fur­loughs,” the com­pany said. “Our pri­mary goal through­out this cri­sis has been to en­sure United — and the jobs it sup­ports — are here when cus­tomers are fly­ing again.”

The in­ter­na­tional pres­i­dent of the flight at­ten­dants’ union, Sara Nel­son, called the fur­lough no­tices a “gut punch” but said United’s es­ti­mates “are also the most hon­est as­sess­ment we’ve seen on the state of the in­dus­try.”

Nel­son, head of the As­so­ci­a­tion of Flight At­ten­dants-CWA, and other la­bor lead­ers in the avi­a­tion in­dus­try are call­ing for Congress to con­tinue into 2021 the CARES Act as­sis­tance for air­lines. She said United’s pro­jected fur­lough num­ber is greater than the to­tal work­force of most ma­jor air­lines a decade ago.

Af­ter drop­ping by more than 90% in March and April, air travel has re­cov­ered slightly, but in­dus­try ex­ec­u­tives are wor­ried a surge in coro­n­avirus cases and quar­an­tine or­ders at im­por­tant hubs such as Chicago and the North­east will cause de­mand to plunge again. Many in the in­dus­try are say­ing it may take at least two years for pas­sen­ger traf­fic to re­turn to 2019 lev­els.

United’s use of the term “fur­lough” as op­posed to “lay­off” im­plies the re­duc­tions could be treated as tem­po­rary, with plans to re­call staff as de­mand picks up. But that de­pends on progress in con­trol­ling COVID-19 and whether peo­ple have the con­fi­dence again to fly in close quar­ters with others.

United said it ex­pects its sched­uled ca­pac­ity in July to be down 75% from its level last year, and that Au­gust should be down 65%.

The air­line’s break­down of po­ten­tial fur­loughs by work group: Air­port Op­er­a­tions (in­cludes cus­tomer ser­vice and gate agents), 11,082; Ca­ter­ing Op­er­a­tions, 808; Con­tact Cen­ters, 983; Flight Op­er­a­tions (in­cludes pi­lots), 2,250; In­flight Ser­vices (in­cludes flight at­ten­dants), 15,100; Net­work Op­er­a­tions Cen­ter, 222, and Tech­ni­cal Op­er­a­tions (in­cludes main­te­nance staff ), 5,457.

United said 20,000 work­ers have taken un­paid leave, but com­pany losses have been so great that it has taken other steps to cut costs and bol­ster liq­uid­ity. It al­ready had an­nounced plans to cut 3,400 man­agers, about 30% of its to­tal, a move that will land hard at its Chicago head­quar­ters in Wil­lis Tower.

Oct. 1 is the first day United can fur­lough staff with­out vi­o­lat­ing terms of the $5 bil­lion in grants and loans un­der the CARES Act, which pro­tects pay­rolls through Sept. 30. United also is due to re­ceive $4.5 bil­lion from the Trea­sury De­part­ment se­cured by war­rants for its shares.

Capt. Todd Insler, chair­man of the bar­gain­ing unit at United for the Air Line Pi­lots As­so­ci­a­tion, In­ter­na­tional, said, “Fur­lough­ing em­ploy­ees is cor­po­rate triage with a ter­ri­ble im­pact on thou­sands of United fam­i­lies.” He said the union will work on pro­pos­als to lower the num­ber of fur­loughs.

JUSTIN SUL­LI­VAN/GETTY IMAGES FILE

United Air­lines ex­pects July flight ca­pac­ity to be down 75% from 2019.

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