United Airlines: Expect Layoffs In The Fall

Taxpayers will pick up the tab to bail out airline shareholders and credits. The cost to airlines of partial nationalization is that they won’t be able to lay off workers until October 1.

  • Expect employees to be assigned minimum hours
  • And all discretionary compensation and bonuses (American Airlines has already informed employees that the Grand Slam 2020, Success at the Airport, Success at the Gate, Success on the Ramp, and Well Being Rewards all go away)
  • And they’ll be encouraging voluntary furloughs, keeping benefits but with or without pay

United Airlines sent a message to employees today with a somber outlook for the industry. They led with the “good news” of the bailout and told employees “United will not conduct involuntary furloughs or pay cuts in the U.S. before September 30th.” That’s a requirement of accepting government funding.

What this means, however, is that United is highly likely to furlough workers on or about October 1. Or, if the bailout’s restrictions are interpreted based on Eastern time, then 11:01 p.m. at United headquarters on September 30.

The letter, under the signatures of both Oscar Munoz and Scott Kirby, says that they do not expect travel to fully recover this year and that means fewer employees. (Emphasis mine.)

The global economy has taken a big hit, and we don’t expect travel demand to snap back for some time. Our April schedule is already cut by more than 60% and we expect our load factors to fall into the teens or single digits even with 60% less capacity. We are currently planning to make even deeper cuts in May and June.

And, based on how doctors expect the virus to spread and how economists expect the global economy to react, we expect demand to remain suppressed for months after that, possibly into next year. We will continue to plan for the worst and hope for a faster recovery but no matter what happens, taking care of each of our people will remain our number one priority. That means being honest, fair and upfront with you: if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.

What United says is the reality of the industry. Fewer customers, fewer flights, will be serviced by fewer people. Allocating nearly $60 billion to the U.S. airline industry hasn’t changed that. It’s just delayed it to the fall.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Maybe United will provide a generous severance package for laid-off employees consisting of free travel vouchers (to anywhere United flies).

  2. If the taxpayers have to pay for them to keep their jobs until Sept 30, why can’t we ask that they be put to work in non-airline work. For example supplementing critical staff at hospitals?

  3. @ David O

    Finally some logic. Why do individuals get to keep every penny of their government bailout checks and every penny of their unemployment insurance bailout checks but businesses no. These individuals get to keep every thing they earned working for a company yet shareholders are supposed to lose everything because of a government mandated shutdown and unprecedented pandemic. It’s ridiculous. Airlines are not in this situation because of how they ran their businesses but because of a global virus.

    Air fares have never been cheaper and never have so many people been able to see the world as today. But flight attendants are the victims when everyone here admits a lot of them on the big 3 treat passengers like cattle and provide poor service. These are the same people who extort airlines every contract for excessively high wages and benefits when they do a terrible job. Management is excessively and ridiculously paid but that is not the same thing as shareholders who invest their capital which includes you, me and everyone with a retirement account, pension or individual account.

    Airlines have plenty of cash to maintain their fleets and pay their aircraft loans and leases. They don’t have money to provide payroll indefinitely with no revenue coming in which is why they asked for government assistance. They were being the nice guys and should have just fired everyone and let them collect unemployment from the government. This catastrophic pandemic makes the union contract null and void. They can rehire some of these people when travel opens up and demand returns for some routes.

  4. @Jackson – Workers do work and get paid. That is their money. They provided something for something. Shareholders take gambles on stocks. They do not provide anything other than cash to gamble with. No, shareholders do not deserve to get any bailout funds. Playing in stocks is a risk and that’s known up front.

    As for the global downturn in travel, yes it is historic. However, not all airlines are going to suffer like UA is and quite frankly, rightfully so. UA has done a terrible job at managing its product. It has the nastiest customer policies of all (currently hoarding cash from customers!!). Remember the dragging of the doctor off the plane? They’ve taken earned bonuses from employees while increasing the ones to management. They’ve basically gone out of their way to create a horrific airline and one of the most hated. AA has not been great, but better than UA. DL has largely become mostly loved. Heck, even Spirit now has a rather loyal following.

    So is this all the fault of UA? Not totally, but they are certainly not helping themselves here. I personally cancelled several trips on AA (me, not them) and they’ve refunded them all no questions asked. UA is 100% opposite of that. Why would anyone dare to take a chance and book with them? Every other airline is doing the right thing, except UA. UA is doing this to themselves by having terrible customer policies and poor products.

    I feel terrible for the employees who will suffer. The shareholders got their payouts, employees get nothing.

  5. @Jackson

    >..shareholders who invest their capital which includes you, me and everyone with a retirement account, pension or individual account.

    No one is forcing you to invest in UAL stock.There are millions of other ways to invest.

  6. Gary,

    I do commend your analytical thoughts on airline management, the airline industry, governmental involvement in the industry, etc. You seem to have a better understanding of the industry more than the average blogger who focuses mostly on frequent flyer bonuses and benefits.

    With that in mind, would you please let me know your thoughts on why the government and the leaders of the major airlines would think that it makes sense to provide billions of dollars to pay tens of thousands, if not hundreds of thousands of people, there full salary when only 10% to 20% of them are working?

    Wouldn’t it make more sense, even from an individual airline management’s perspective to furlough those who can be easily retrained and/or rehired (flight attendants, reservations agents, ticket agents, gate agents, other airport personnel) and let those employees receive the standard unemployment benefits that the rest of the country receives? I can understand from a security standpoint why pilots, at least a greater percentage, might be kept on the payroll, but, for everyone else, it seems that the US taxpayer is paying the full salary of an $80K/year flight attendants not to fly.

    If I were the CEO of a major US airline, if I wanted to be responsible to my investors (and to my employees to insure they have a viable company to return to six months from now), wouldn’t I want to make my case to congress and the President that I might only need a quarter of what was offered in the stimulus package to cover my hard costs and 10% to 20% of my workforce?

    It seems like the airline CEOs who asked for this bailout are wasting a tremendous amount of public resources. Your thoughts?

  7. To Jon: Flight attendants are required to have the same Rigorous post 9/11 10 year background checks as pilots . It is extremely costly to hire and train them. The FAA mandates a strict protocol in the training of any flight crew personnel . Flight attendants aren’t just waitresses in the sky.

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