United Airlines puts 36,000 staff on notice that jobs are at risk

United Airlines notified 36,000 employees, or 45 per cent of its US workforce, that their jobs are at risk after federal payroll aid expires at the end of September.

The final layoff tally hasn’t been finalised and could be smaller as workers weigh offers to leave voluntarily, United told employees on Wednesday. The planned furloughs include about 15,000 flight attendants, 11,000 customer service staff and 5,500 maintenance employees. About 3,700 workers have already taken voluntary separation packages.

United’s warning signals the depth of potential job losses at US airlines later this year, even after the US government provided $25 billion (Dh91.8bn) in payroll support and made another $25bn available in loans. The airline told employees on Monday that state quarantines prompted by a jump in coronavirus infections were jeopardising a nascent US travel recovery. United expects that travel demand will remain weak until a treatment or vaccine is widely available.

“We are living through the most disruptive financial crisis in the history of commercial aviation,” the company said in a letter to employees. “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.”

The shares fell 2.6 per cent to $31.71 at 12:20pm in New York on Wednesday amid broad declines at US airlines. United's shares had fallen 63 per cent this year by close on Tuesday Tuesday, the biggest drop on a Standard & Poor’s index of major carriers.

Workers represented by union contracts will be furloughed based on their seniority, while management employees will be culled based on their performance and job-specific needs, United executives said. Those who are cut will be given the option to return to their jobs whenever travel demand returns and additional labour is needed.

The proposed furloughs are “a gut punch” for United flight attendants “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 25,000 employees at the airline.

“This crisis dwarfs all others in aviation history and there’s no end in sight,” she said in a statement. “Demand was just barely climbing back to 20 per cent of last year and even those minimal gains evaporated over the last week due to surging Covid-19 cases across the country.”

United is in “active discussions” with its pilots’ union, the Air Line Pilots Association, on terms of an early-retirement package for more senior aviators, a company executive said. That could reduce the proposed 2,250 pilots who face furloughs in October.

United’s rivals are also studying major job cuts. Last week, American Airlines said it would have  20,000 more employees than it needs to operate a reduced flying schedule later this year. Delta Air Lines said last month it would inform almost 2,600 pilots about a possible furlough and encouraged a total of 7,900 eligible aviators to accept early retirement.

Airlines are restricted from mass layoffs until September 30 under the terms of federal aid, which is part of the government's $2 trillion Cares Act.

The industry’s major job cuts are expected to commence on October 1, roughly a month before the US presidential election. That dynamic has raised the prospect that Congress may decide to extend payroll-support measures to avoid tens of thousands of job losses. Some airline unions are using the prospect of mass layoffs to press for additional funds.

United cannot rely on additional taxpayer support for its business to survive and considers the job cuts necessary, an executive told reporters on a call. Last month, lobbying group Airlines for America said big carriers such as United and American weren’t pursuing additional government assistance.