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United Warns 36,000 Employees of Potential Job Cuts as Pandemic Roils Travel Demand

The terms of $25 billion in federal aid prohibit airlines from laying off or furloughing workers until Oct. 1

A United Airlines plane sits at a gate Ronald Reagan Washington National Airport, May 5, 2020 in Arlington, Virginia.
Photo by Drew Angerer/Getty Images

United Airlines on Wednesday said it is warning about 36,000 frontline employees — more than a third of its staff — about potential job cuts as the coronavirus pandemic continues to roil travel demand.

Federal law requires employers to give staff notice about possible layoffs or temporary furloughs 60 days in advance. United and other airlines that took $25 billion in federal payroll support are prohibited from laying off, furloughing or cutting the pay rates of staff until Oct. 1.

In a memo sent to employees Wednesday, United said just because workers receive a WARN notice it doesn’t mean they will definitely be furloughed and it said it will try to exhaust voluntary measures before cutting workers. Some of the workers may be called back to work but that will depend on a return to demand, which some industry executives say could take years.

United shares were down 2.2% after the announcement on potential furloughs, slightly lower than earlier in the session.

The furloughs would apply to unionized workers and warnings are going to some 15,000 flight attendants, more than half of the airline’s cabin crew and more than 2,200 pilots.

“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,” said Sara Nelson, a flight attendant for the airline and president of its labor union, the Association of Flight Attendants.

United, Delta and American and other airlines have been urging workers to take early retirements, buyouts and other voluntary measures as the carriers scramble to cut costs. But travel demand is a fraction of last year’s just as what is usually the peak summer travel season hits. That presents a bleak outlook for the industry, and voluntary measures may not be enough to reduce airlines’ costs to match weak demand.

United executives have said that despite a resurgence in past weeks, demand has started to slip, as new coronavirus cases rise and travel restrictions take effect.

United had about 96,000 employees as of the end of last year.

The airline is negotiating with its pilots’ labor union about early retirements, a United executive said.

Labor unions, including the flight attendants’ AFA, last month asked Congress to extend aid to support airline workers’ jobs through the end of March.

This story first appeared on CNBC.com. More from CNBC:

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