United Airlines is warning 36,000 employees – nearly half its U.S. staff – they could be furloughed in October, the clearest signal yet of how deeply the virus pandemic is hurting the airline industry.
The outlook for a recovery in air travel has dimmed in just the past two weeks, as infection rates rise in much of the U.S. and some states impose new quarantine requirements on travelers.
United officials said Wednesday that they still hope to limit the number of layoffs by offering early retirement benefits, and that 36,000 is a worst-case scenario. The notices going to employees this month are meant to comply with a 60-day warning ahead of mass job cuts.
The furloughs could include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers and 2,250 pilots.
“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. “This crisis dwarfs all others in aviation history, and there’s no end in sight.”
If United carries through on the notices, furloughs would take effect on or shortly after Oct. 1. United can’t lay off workers before then as a condition of the $5 billion it got as its share of $25 billion in federal aid to help airlines cover payroll costs.
The flight attendants’ union and other airline labor groups are lobbying Congress for another $25 billion to protect jobs through next March. But a senior United executive expressed doubt that Congress would approve the spending in an election year.
United has already cut capital spending by $2.5 billion and convinced thousands of employees to take unpaid leave. It has hoarded cash after raising billions in new borrowing – including mortgaging its MileagePlus frequent-flyer program.
But with ticket sales sagging again, the Chicago-based airline is still losing about $40 million a day, executives said.
Layoffs are “the last option left to protect the long-term interests of the company,” said the senior United official, who spoke to reporters on condition of anonymity.
Executives said the notices covered 45% of the airline’s U.S. staff, most of whom are represented by unions. They would have reinstatement rights if United’s fortunes improve. Another 1,300 management and support staff will be laid off Oct. 1, the company said. Including international employees, United has a work force of about 95,000.
Air travel in the U.S. plunged about 95% from March 1 until mid-April, then began a slow recovery. The number of U.S. air travelers around the July 4 weekend was the highest since mid-March, but was still down about 70% from a year ago.
In recent weeks, the number of new reported cases of COVID-19 has roughly doubled to about 50,000 a day. New York, New Jersey, Connecticut and Chicago have announced that people arriving from states with high infection rates will have to quarantine, throwing up a new roadblock to travel.
United’s traffic at its hub in Newark, New Jersey, has slumped more deeply than the rest of its network since those quarantine rules were announced.
Executives of other airlines have predicted their companies will be much smaller, with fewer employees, in October.
Delta Air Lines recently told employees that it will send layoff notices to more than 2,500 of its 14,000 pilots. Germany’s Lufthansa has warned that it might cut 22,000 jobs, and Air France last week announced plans to eliminate 7,500 jobs.