United Plans 16,000 Furloughs As Airlines Cut Jobs During Pandemic Downturn

Sep 2, 2020
Originally published on September 3, 2020 5:55 am

United Airlines will be putting 16,370 workers on involuntary, indefinite furlough at the start of October unless more aid materializes from the federal government, the company announced Wednesday.

Together with some 7,400 voluntary departures, the airline is cutting its workforce by more than 25%. It's hardly alone. American Airlines recently announced 19,000 furloughs and layoffs, while Delta cut its workforce by 20% through buyouts.

The airline industry has been clobbered by the coronavirus pandemic. While air traffic has risen from its lowest point this spring, it remains far below pre-pandemic levels. And airlines are intentionally keeping many seats empty — a move that promotes safety but hurts their bottom line.

In a recent earnings call, United reported that revenues were down more than 87% compared with last year.

"The pandemic has drawn us in deeper and lasted longer than almost any expert predicted, and in an environment where travel demand is so depressed, United cannot continue with staffing levels that significantly exceed the schedule we fly," the company wrote. "Sadly, we don't expect demand to return to anything resembling normal until there is a widely available treatment or vaccine."

Airlines received a lifeline from the federal government this spring in the form of $25 billion in aid authorized through the CARES Act. The companies frantically sought cost savings — through voluntary furloughs and retirements, buyouts, schedule-sharing and other measures — but, as a condition of that aid money, were prohibited from laying off staff.

The aid money and the job protections expire Sept. 30.

The House passed a bill that would extend the payroll support program that has been helping the airlines. But the Senate has not.

In its announcement of furloughs, United urged employees to write to their representatives to support the extension, calling it "the one thing that would prevent involuntary furloughs on October 1 and hopefully delay any potential impact on employees until early 2021."

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RACHEL MARTIN, HOST:

The second-biggest airline in the U.S. is moving forward with drastic cuts. United Airlines is putting more than 16,000 employees on indefinite furlough. The timing is worth noting because a federal aid package is due to expire at the end of the month, and that's prompting a wave of furloughs and layoffs across the industry.

NPR's Camila Domonoske is covering this and joins us this morning. Hi, Camila.

CAMILA DOMONOSKE, BYLINE: Hi. How are you?

MARTIN: I'm doing well. So put this in perspective. How severe are these cuts?

DOMONOSKE: These are substantial. Between involuntary furloughs and voluntary departures, United is looking at reducing its workforce by more than a quarter. And it's not alone in that. Delta cut its workforce by 20%. American Airlines is expecting to cut 30%. And that's on top of reduced hours and some voluntary leave for many people who are keeping their jobs.

MARTIN: And how does this all tie into the federal aid package?

DOMONOSKE: So $25 billion was set aside in the CARES Act and specifically went to airlines. That was controversial. Critics called it a bailout. Democrats wanted more provisions covering climate change or minimum wages, which they didn't get. The White House pushed to get more stock in exchange. But ultimately, there was a deal, and it required airlines not to lay people off through the end of September, which is coming up fast.

MARTIN: Right.

DOMONOSKE: So United says it could start laying people off starting October 1 and that the one thing - they're publicly saying this - the one thing that would stop these furloughs is if the program is extended. So they're asking their own employees, whose jobs are on the line, to lobby Congress, basically, to save their jobs.

MARTIN: And how is that very strong, not-so-subtle pressure being received in the halls of Congress?

DOMONOSKE: Yeah, so the - all the airlines and many airline unions are involved in this pressure, and it does look like if Congress manages to pass any kind of follow-up to the CARES Act, there is some bipartisan support for including more aid for airlines. But so far, Congress just hasn't reached any agreement. So the airlines are kind of in the same boat as everyone who's hoping for a second stimulus check.

I spoke with Ken Diaz. He's with the Association of Flight Attendants. He represents the union's members who work at United. And he was clearly frustrated.

KEN DIAZ: We have to get back to talking to each other because everything is falling apart - this industry, the economy, the unemployment, I mean, health care. There has to be compromise, and everyone has to be at that table - the White House, the Democrats, the Republicans. Do the work that Americans have elected you to do.

DOMONOSKE: Meanwhile, President Trump has suggested he might do some kind of executive action to provide a boost to the industry, and it's not clear what that would involve.

MARTIN: I mean, what are the losses, really? When you look at the impact the pandemic has had on the airline industry, how much business have airlines lost?

DOMONOSKE: People are not flying like they used to. I mean, United's most recent earnings release - revenues were down 87%. If you look across the board, air traffic is at around 30% of normal. And it's not just that companies are flying fewer planes. Some companies are also flying emptier planes on purpose to reduce the spread of the virus, which is the complete opposite of what they'd want to do for their bottom line. So from a financial perspective, this is very hard on them.

MARTIN: And I suppose they have to gird themselves for the long haul - right? - because, I mean, I don't know when people are going to be OK with getting on airplanes.

DOMONOSKE: Yeah, no one expects air travel to be popular again anytime soon - not unless there's treatment or a vaccine. So even if there is aid, it might just delay furloughs until early next year. Even longer-term, what's going to happen to business travel if everyone is comfortable on Zoom? Nobody knows.

MARTIN: Right. NPR's Camila Domonoske, thanks. We appreciate it.

DOMONOSKE: Thanks. Transcript provided by NPR, Copyright NPR.