United Airlines is preparing to furlough up to 36,000 employees - as much as 45% of its front-line US -based workers - as the coronavirus pandemic ravages the airline industry.
While travel had picked up in some areas over the past two months from pandemic-driven lows in April, United has seen reservations for travel within the coming month slide after New York, New Jersey and CT said they would require people arriving from hot-spot states to quarantine for 14 days. The notices being sent to employees this month are meant to comply with 60-day warning ahead of mass job cuts.
Of the 36,000 United employees who could be affected, roughly 15,000 are flight attendants and 11,000 are customer service or gate agents.
"This crisis dwarfs all others in aviation history and there's no end in sight", she said in a statement.
"The reality is that United simply can not continue at our current payroll level past October 1 in an environment where travel demand is so depressed".
USA airlines have already received $25 billion in payroll aid under the CARES Act to protect jobs through September and have until Sept. 30 to decide whether to take the loan, which would include the issue of warrants and restrictions on executive compensation and share buybacks.More news: New Tropical Depression forms over the Western Atlantic
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.
"Involuntary furloughs that we worked so hard to avoid are now the last option left to protect the long term interests of the company", a United executive said.
The big United States airline said it does not expect everyone who receives the notice to be furloughed, but emphasised that it must cut costs due a severe drop in demand. Another 1,300 management and support staff will be laid off October 1, the company said.
Air travel in the USA plunged about 95% from March 1 until mid-April, then began a slow recovery.
While air travel picked up slightly over the July 4 holiday, only about a quarter of the number of travelers passed through airports last weekend as compared to past year.
In an internal presentation on Monday, United said reservations for travel within the coming month quickly began to slide after New York, New Jersey and CT said they would require people arriving from hot-spot states to quarantine for 14 days, a source told Reuters.More news: Alberta reports 130 new COVID-19 cases over past three days
United's bookings for flights at its hub in Newark, New Jersey, have slumped badly since the region's governors announced the quarantine requirements, falling 84% from a year earlier.
The number of furloughs could be less depending on the number of employees who take advantage of early retirement, voluntary separation or other programs. executives said.
"In the past few weeks, thousands of pilots and crew members have received furlough notices, and absent congressional action, it is likely that there will be more to come", said Capt. Joe DePete, president of the Air Line Pilots Association.
Sign up and receive coronavirus news and breaking updates, from our newsroom to your inbox.
Last week, the Treasury said it had agreed on the terms for government loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, with five other airlines including American Airlines.
Germany's Lufthansa has warned that it might cut 22,000 jobs, Air France last week announced plans to eliminate 7,500 jobs, and Latin America's two largest carriers have filed for bankruptcy protection. He calls the initial federal funding provided to the airlines in the CARES Act "a major financial lifeline for our industry", but he added, "Clearly more needs to be done".More news: A rare comet is zipping past Earth. Here’s how to view it.