Economic effects of the ongoing Covid-19 pandemic that crippled the airline industry throughout 2020 and into 2020 continue to loom large…
United Airlines Warns of Mass Furloughs in October
As the COVID-19 pandemic continues to decimate travel demand, the airline industry continues to feel this major impact. United Airlines announced that they are getting ready to send potential furlough notices to about 36,000 employees. This would make up about 45% of their staff members in the United States.
The airline claims that each notice would not necessarily mean a furlough for that employee and the final numbers will depend on the travel demand, financial status, and the number of employees willing to take voluntary leave packages.
While many airlines have warned about job cuts as a result of the pandemic, United is one of the first major carriers to announce them on this large of a scale. Due to the CARES Act and its regulations, layoffs can’t start until Oct. 1. According to federal labor laws, employees of companies facing mass furloughs must be given at least a 60-day notice.
This announcement comes days after United Announced a significantly increased flying schedule for the month of August. However, since then the Chicago-based carrier has already cut some capacity in August.
Of the employees that could be affected nearly 15,000 are flight attendants and 11,000 are customer service and gate agents. The rest of the 36,000 employees include technical operations, contact workers, catering workers and network operations. Over 2,000 pilots could also be included.
Sara Nelson, president of the Association of Flight Attendants-CWA (AFA) said that the furlough numbers “are the most honest assessment we’ve seen on the state of the industry.” The Association of Flight Attendants is a union group that represents flight attendants for numerous airlines, including United.
Nelson also stated that the numbers were a “gut punch” and that AFA would continue to work to find voluntary options to “help mitigate furloughs”.
United has already offered numerous voluntary leave programs over the course of the pandemic with over 26,000 employees taking advantage. These voluntary leave programs range from short-term leaves to long-term packages such as early retirement.
The U.S. Treasury Department announced that all of the major airlines in the United States applied for new loans from the CARES Act that were made available this week. While airlines across the country have received $25 billion already, these new loans could total about the same amount.
According to the Washington Post, an employee memo stated, “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.”
United Airlines is still struggling with significant cash burn at about $40 million per day.
Like most airlines, United’s New York area hub in Newark, New Jersey has seen the most drastic losses due to COVID-19. With business travel numbers being significantly lower than normal times, Newark books in the near-term are at just 16% of what they were last year.
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