United Airlines will warn 36,000 workers of possible layoffs — more than a third of its entire workforce
David Slotnick
13 hours ago
Scott Olson / Getty Images
UAL United Airlines
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Travel demand had begun to recover since April, when coronavirus lockdowns drove demand down as much as 97%, but the airline said demand fell again in recent weeks as virus cases spiked in several states.
The affected employees will receive Worker Adjustment and Retraining Notification Act notices, or WARN notices, this week, with a final notice about their status in early August. American Airlines began informing some employees of furloughs in late June.
The affected frontline employees constitute 15,000 flight attendants, 2,250 pilots, 11,000 customer-service and gate agents, 800 catering workers, 1,000 contact-center employees, 225 network-operations workers, 5,500 maintenance workers. An additional 1,400 management and administrative employees could also be affected.
Airlines like United have tried to limit involuntary layoffs by reducing their headcounts through voluntary measures like buyouts, voluntary leave, and early retirement.
While airlines are prohibited from furloughing or laying off workers until October 1 under the terms of the payroll support they received from the CARES Act, most employers are required to give 60 days of notice when possible under the WARN Act.
The airline said that not every worker who received a WARN notice would be impacted and that the final number would depend on how many more employees take voluntary leave and buyout packages, as well as whether demand makes an unexpected recovery by next month.
Workers who are ultimately furloughed could end up being recalled once travel demand improves. However, the airline has said it does not expect a full recovery until there is an effective vaccine or treatment for the novel coronavirus.
United said that new bookings began to slide almost as soon as New York, New Jersey, and Connecticut said last month that they would require people coming from certain states with high COVID-19 cases to quarantine for 14 days. Specifically, it said, reservations for near-term travel within the next 30 days plummeted after steadily rebounding for months.
In a media briefing on Tuesday, a senior executive for the airline said that the drop in travel demand coincided with quarantine orders imposed by some states as coronavirus cases spiked in others.
The fall was most severe at the airline's New York City hub in Newark, New Jersey, where near-term net bookings were just 16% of the previous year's level, down from about a third shortly before the tristate quarantine order was announced.
The airline said it expected to see a similar drop in demand at its Chicago hub following the implementation of a quarantine order in the city this week.
In a filing with the Securities and Exchange Commission this week, United said it expected demand to recover slowly and inconsistently through the pandemic.
United "does not expect the recovery from COVID-19 to follow a linear path, as illustrated by recent booking and demand trends," the filing said.
"Consolidated capacity through the end of 2020 is expected to be generally consistent with August 2020," it continued, indicating that the airline does not expect a material improvement in demand until at least 2021.
"COVID-19 is an unprecedented threat to aviation workers and the entire US aviation industry," Sara Nelson, the president of the Association of Flight Attendants, said in a statement. "This crisis dwarfs all others in aviation history and there's no end in sight. Demand was just barely climbing back to 20 percent of last year and even those minimal gains evaporated over the last week due to surging COVID-19 cases across the country."
In the SEC filing, United said it expected capacity to fall by 65% in August compared with 2019. The airline estimated last week that the drop would be 60%, but it said it made adjustments "resulting from reduced demand to destinations experiencing increases in COVID-19 cases and/or new quarantine requirements or other restrictions on travel."
As demand for air travel has slowly picked up from lows in April, airlines have said most of that demand has come from leisure and "VFR" travelers — those visiting friends and relatives — as some states lift restrictions and Americans seek to shake off cabin fever after months in quarantine.
Corporate travel, which yields higher margins for airlines, has not meaningfully returned.
Though the airline was somewhat optimistic that corporate travel could begin to return, with some companies lifting business-travel restrictions, the new outbreaks and associated quarantines have effectively negated those hopes, the senior executive said.
David Slotnick
13 hours ago
Scott Olson / Getty Images
UAL United Airlines
32.53 -0.02 (-0.06 %)
Disclaimer Get real-time UAL charts here »
- United Airlines said on Wednesday that it would issue layoff and furlough notices to 36,000 frontline employees, including 15,000 flight attendants and 2,250 pilots.
- The airline said that it saw travel demand slowly climb through May and June but that new coronavirus outbreaks and quarantine orders caused it to collapse again.
- The airline said it expected to fly at about 40% of its capacity in August and not more than that through at least 2020.
- Are you an employee at United or another airline? Contact this reporter with your thoughts or tips at [email protected].
- Visit Business Insider's homepage for more stories.
Travel demand had begun to recover since April, when coronavirus lockdowns drove demand down as much as 97%, but the airline said demand fell again in recent weeks as virus cases spiked in several states.
The affected employees will receive Worker Adjustment and Retraining Notification Act notices, or WARN notices, this week, with a final notice about their status in early August. American Airlines began informing some employees of furloughs in late June.
The affected frontline employees constitute 15,000 flight attendants, 2,250 pilots, 11,000 customer-service and gate agents, 800 catering workers, 1,000 contact-center employees, 225 network-operations workers, 5,500 maintenance workers. An additional 1,400 management and administrative employees could also be affected.
Airlines like United have tried to limit involuntary layoffs by reducing their headcounts through voluntary measures like buyouts, voluntary leave, and early retirement.
While airlines are prohibited from furloughing or laying off workers until October 1 under the terms of the payroll support they received from the CARES Act, most employers are required to give 60 days of notice when possible under the WARN Act.
The airline said that not every worker who received a WARN notice would be impacted and that the final number would depend on how many more employees take voluntary leave and buyout packages, as well as whether demand makes an unexpected recovery by next month.
Workers who are ultimately furloughed could end up being recalled once travel demand improves. However, the airline has said it does not expect a full recovery until there is an effective vaccine or treatment for the novel coronavirus.
United said that new bookings began to slide almost as soon as New York, New Jersey, and Connecticut said last month that they would require people coming from certain states with high COVID-19 cases to quarantine for 14 days. Specifically, it said, reservations for near-term travel within the next 30 days plummeted after steadily rebounding for months.
In a media briefing on Tuesday, a senior executive for the airline said that the drop in travel demand coincided with quarantine orders imposed by some states as coronavirus cases spiked in others.
The fall was most severe at the airline's New York City hub in Newark, New Jersey, where near-term net bookings were just 16% of the previous year's level, down from about a third shortly before the tristate quarantine order was announced.
The airline said it expected to see a similar drop in demand at its Chicago hub following the implementation of a quarantine order in the city this week.
In a filing with the Securities and Exchange Commission this week, United said it expected demand to recover slowly and inconsistently through the pandemic.
United "does not expect the recovery from COVID-19 to follow a linear path, as illustrated by recent booking and demand trends," the filing said.
"Consolidated capacity through the end of 2020 is expected to be generally consistent with August 2020," it continued, indicating that the airline does not expect a material improvement in demand until at least 2021.
"COVID-19 is an unprecedented threat to aviation workers and the entire US aviation industry," Sara Nelson, the president of the Association of Flight Attendants, said in a statement. "This crisis dwarfs all others in aviation history and there's no end in sight. Demand was just barely climbing back to 20 percent of last year and even those minimal gains evaporated over the last week due to surging COVID-19 cases across the country."
In the SEC filing, United said it expected capacity to fall by 65% in August compared with 2019. The airline estimated last week that the drop would be 60%, but it said it made adjustments "resulting from reduced demand to destinations experiencing increases in COVID-19 cases and/or new quarantine requirements or other restrictions on travel."
As demand for air travel has slowly picked up from lows in April, airlines have said most of that demand has come from leisure and "VFR" travelers — those visiting friends and relatives — as some states lift restrictions and Americans seek to shake off cabin fever after months in quarantine.
Corporate travel, which yields higher margins for airlines, has not meaningfully returned.
Though the airline was somewhat optimistic that corporate travel could begin to return, with some companies lifting business-travel restrictions, the new outbreaks and associated quarantines have effectively negated those hopes, the senior executive said.
