United may furlough nearly 36,000 despite CARES Act aid
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% of the Chicago-based airline’s workforce.
The layoffs would include 66 people at Pittsburgh International Airport and 95 at Philadelphia International, according to a notice filed with the Pennsylvania Department of Labor and Industry. The Worker Adjustment Retraining Notification (WARN) indicated the layoffs were expected to last six months or more.
Government grants received through the $2 trillion CARES Act require airlines to keep front-line workers on the job through Sept. 30. In addition to receiving $4.9 billion in grants, United signed a letter of intent this week to accept roughly $4.5 billion in loans through the law.
But executives said with demand for air travel unlikely to return in 2020, they have no choice but to warn employees of layoffs.
“The reality is that United simply cannot continue at our current payroll level past Oct. 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 costcutting and capital-raising.”
Under the WARN Act, most firms with 100 or more employees must give 60 days’ notice of mass layoffs or plant closings. What is happening at United will probably be repeated as carriers struggle to survive the worst economic crisis in the industry’s history. Airline executives have already signaled they expect to emerge from the crisis with smaller workforces.
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.”
Still, Wednesday’s announcement was a blow to employees.
“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 accept
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 also cut other costs, but officials said it is burning through $40 million a day.
Demand for travel has increased slowly but remains far below 2019 levels. In its June forecast, the International Air Transport Association estimated carriers worldwide would lose $84.3 billion in 2020. Revenue is expected to fall 50%, from $838 billion in 2019 to $419 billion this year.
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 treatments or a vaccine become widely available.
The AFA and other unions have called on Congress to extend payroll support offered through the CARES Act, warning layoffs in aviation will ripple through the entire economy.