United Airlines is issuing a warning that 36,00 employees, and almost half of its front-line US-based workers, could be furloughed in the fall.
What We Know:
- United Airlines warned that almost 45% of US-based workers could lose their jobs on Oct. 1, or soon after, as the federal requirements of the Payroll Support Program (PSP) which prohibited airlines from involuntary layoffs will expire. The airline employs 95,000 people globally, but close to half in the U.S. may be affected.
- As the positive coronavirus test rates continue to rise, states like New York, New Jersey, and Connecticut are enforcing self-quarantine rules to avoid a second wave and a potential spike in their numbers which dampened traveling. To avoid layoffs, United implemented several measures such as freezing non-essential hiring and slashing the salaries of executives, but the airline is still spending $40 million a day to stay afloat.
- The airline said they are notifying the potentially affected employees sometime this week – over 15,000 flight attendants, 11,000 customer service and gate agents, and 2,500 pilots. The layoffs for management and administrative staff will be based on their performance reviews, while the front-line employees will be laid off based on seniority.
- United anticipates that by mid-August they will be able to determine what the total number of furloughs will be, as there are close to 4,000 employees which opted to resign and receive voluntary separation packages already. If more people decide to voluntarily resign or go into early retirement, the airline will have fewer job cuts come fall.
“There have not been enough voluntary departures accepted by employees,” a United executive said.
- United will not be the only airline laying off employees in the fall. In October, other airlines will be following suit as they will no longer be required to meet the federal requirements in the PSP, which has prompted airline Unions to demand an extension. United, along with several other airlines – Delta, Southwest (LUV), Alaska (ALK), and Jetblue (JBLU) – all applied for a new round of loans available under the CARES Act, the Treasury Department announced on Tuesday.
The airlines have already received $25 billion in aid and this new round of loans could mean another $25 billion. The terms of the first $25 billion in federal aid prohibit airlines from furloughing employees until Oct. 1.