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United Airlines Warns That It Could Layoff 36,000 Employees


TOPLINE

United Airlines said on Wednesday that it could furlough up to 36,000 employees—almost half its U.S. workforce—in October if the coronavirus pandemic continues to wreak havoc on global travel.

KEY FACTS

United announced that it is warning more than a third of its frontline employees about potential job cuts starting in October, as the company continues to struggle with the economic fallout from coronavirus.

The furlough warning includes some 15,000 flight attendants, more than half of the airline’s in-flight cabin crew and over 2,200 pilots.

Like other big airlines, United took government bailouts to help cope with the pandemic: The company received about a fifth of the $25 billion in federal aid authorized by Congress in March.

But the government support also mandates that airlines are prohibited from laying off or furloughing workers until October 1, which explains the company’s advance notice of the potential job cuts.

United shares tumbled more than 3% on the news of the possible furloughs. Shares are down 65% so far in 2020—making it one of the worst-performing stocks in the S&P 500 this year.

The company did say in its memo to employees, however, that the warning won’t necessarily result in definite layoffs and employees could be called back to work if demand for global air travel rebounds.

Key background

Airlines have been one of the hardest-hit industries during the pandemic, with coronavirus all but eviscerating global travel demand in recent months. Big carriers like Delta, American and United have all scrambled to cut costs, urging workers to take early retirements and buyouts as travel demand plunges. Airlines have largely cut back on voyages, been forced to beef up health precautions and fly at significantly reduced capacity.

Crucial quote

“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,” says Sara Nelson, president of the Association of Flight Attendants union, which represents workers at 19 different airlines including United. In her statement, she called on Congress to extend stimulus funding in order to “avoid hundreds of thousands of layoffs from an industry that normally drives economic activity.”

Further reading

These Are The 10 Worst Performing S&P 500 Stocks So Far This Year (Forbes)

Why American Airlines Is Growing Twice As Fast As Delta And United (Forbes)

Warren Buffett Sells Airline Stocks Amid Coronavirus: ‘I Made A Mistake’ (Forbes)

American, United Airlines Will Go Back To Packing Flights Despite Covid-19 Coronavirus (Forbes)

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