United Airlines to cut more than 16,000 jobs

Workforce reductions will take effect when government restrictions linked to financial aid end next month

FILE - In this July 18, 2018, file photo a United Airlines commercial jet sits at a gate at Terminal C of Newark Liberty International Airport in Newark, N.J.  United Airlines plans to furlough about 16,000 employees in October 2020 as air travel continues to be hammered by the pandemic. That's fewer furloughs than United predicted in July, when it warned 36,000 employees that they could lose their jobs.  (AP Photo/Julio Cortez, File)
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United Airlines will eliminate 16,370 jobs next month as the carrier shrinks operations in response to the steep decline for air travel demand amid the Covid-19 pandemic.

The furloughs announced on Wednesday will take effect as soon as October 1 as a six-month restriction on job cuts imposed in exchange for aid under the US Cares Act expires.

To date, about 7,400 United employees have chosen to exit the company voluntarily, while another 20,000 are on temporary leave programmes.

United’s reductions add to the 19,000 job cuts planned by American Airlines. Both carriers said the only thing that would avert the furloughs would be an extension of government aid to the industry that’s being debated in Washington.

Last month, United notified 36,000 of its nearly 92,000 employees that their positions were at risk once the US payroll support program ended. That number was reduced for most work groups through voluntary programmes, said Kate Gebo, United’s executive vice president for human resources.

“Sending furlough notices today does not mean we are stopping our furlough mitigation efforts,” Gebo said, noting that the final tally of reductions will change by next month. “It’ll be something we continually work on.”

The workers who are placed on furlough may be called back when demand improves. Chicago-based United doesn’t expect any meaningful recovery in travel demand until a coronavirus treatment or vaccine is widely administered. Until that happens, the carrier has predicted that its sales won’t rise to more than half of 2019 levels.

United’s September schedule is only 37 per cent of what it was a year earlier. Passenger volumes remain about 70 per cent below 2019 levels, based on US security-screening data, with only around 661,000 people flying in the US. Reflecting the pandemic’s impact, United’s revenue plunged 87 per cent in the second quarter, leading to a record $2.6 billion (Dh9.7bn) adjusted loss.

Debate has stalled in Congress over a proposed renewal of the government’s $25bn in payroll support for airlines, which would likely carry the same six-month restrictions on workforce cuts. More US funding would forestall the involuntary job cuts, said Josh Earnest, United’s top spokesman.

“That’s a deal that we would readily accept – happily accept, even,” he said.

The airline is pleased that a further extension of airline payroll funding appears to enjoy bipartisan support from Congress and the Trump administration, Mr Earnest said, but “that’s not something we can count on at this point”.

The United cuts include 6,920 flight attendants, 2,260 airport agents, 2,010 mechanics and 1,400 management employees, along with 2,850 pilots whose furloughs were announced last week.

United shares rose 0.1 per cent to $36.06 at 9:04pm UAE time on Wednesday. The stock has declined 59 per cent so far this year.