Layoffs expected at airlines
Reports: Unemployment claims drop in Florida
Airlines whose businesses have been battered by COVID-19 are setting the stage to lay off workers in Florida this fall, with United Airlines being the first to signal hundreds of firings in the state starting in October, according to filings with the Department of Economic Opportunity.
Spirit Airlines of Miramar, which has had many employees on voluntary leaves, recently told workers that layoffs may be needed, calling the situation “fluid.”
In a filing with the state of Florida, United said it intends to cut 447 workers at Orlando International Airport and 109 at Tampa International Airport between Oct. 1 and Oct. 15. The carrier made no mention of Fort Lauderdale-Hollywood International Airport, where it maintains a smaller presence than in Central Florida.
Another 87,062 workers filed initial jobless claims with the state of Florida for the week ended July 25, a decline of 21,914 from the week before, the U.S. Department of Labor reported Thursday.
Nationally, new claims rose to 1.434 million, an increase of 12,000 from the week before.
“There are more than 30 million people receiving unemployment benefits in all programs as of July 11,” said Greg McBride, a financial analyst for Bankrate. “The virus spread and economic rollbacks in the weeks since do not bode well for the labor market in the weeks and months ahead.”
The strong flow of claims are symbolic of a U.S. economy shaken in the second quarter by the biggest decline in activity ever for the period, according to a report released Thursday by the U.S. Department of Commerce.
Gross domestic product from April to June fell 32.9%, Steep drops were seen in personal consumption, exports, inventories, investment and spending by state and local governments.
“It was an epicly bad second quarter and we got our first look at just how bad — down 32.9 percent on an annualized basis, the worst 3-month U.S. economic contraction ever recorded,” McBride said. “The economy continues to set records for all the wrong reasons.”
The numbers essentially reflected the slowdown being experienced by sensitive service sector industries that drive Florida’s economy: leisure, hospitality and transportation. Without a steady flow of customers being brought by airlines and other forms of transportation, hotels, restaurants and entertainment centers have all suffered severe setbacks between April and June, despite reopenings allowed by state and local governments.
Airlines that received large grants and loans from the federal government as part of Washington’s sweeping efforts to save jobs in the face of the coronavirus are forbidden from eliminating jobs until Oct. 1. United, Spirit and most all of the larger carriers fit into that category, so most commercial aviation jobs are considered safe until the end of September.
“There is obviously a bright line date of Sept. 30 right now,” Spirit CEO Ted Christie
said during a financial call with analysts earlier this month. “We are still in a fluid evaluation as to what we think we would need to do.”
He said the discount airline is “in regular discussions with organized work groups” and that “thousands of employees accepted voluntary leaves that helped us navigate the crisis and reduce fixed expenses.”
Other carriers including Delta Air Lines and American Airlines have warned that massive cutbacks are likely for the fall. Delta, which has served South Florida for decades with its principal regional operations in Fort Lauderdale, is offering voluntary retirement packages.
Goldman Sachs, the Wall Street investment firm, forecast that the industry is unlikely to see a return to 2019 passenger volumes before 2023.
“[C]urrent traffic trends are below what we had previously forecast .. .and the resurgence of COVID-19 in some areas of the U.S. adds uncertainty around potential further travel restrictions,” the firm said in a recent report.
Florida’s restaurant and hospitality industries felt more pain with extended furloughs announced by prominent hotels and restaurants.
On Friday, the Ruth’s Chris restaurant in North Palm Beach is closing its doors at the cost of 43 jobs, according to a state filing. And in Miami, the luxury Kimpton EPIC Hotel in the city’s downtown is extending the furloughs of 168 workers, following the lead of a broad cross-section of luxury and business hotels around South Florida..
As of Tuesday, the DEO had paid more than 1.8 million people more than $12 billion, although most of the money came from a federal program is formally expiring on Friday. Congress is currently debating whether to continue or replace a weekly $600 payout to the unemployed that started in April.