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Airlines that received government loans were forbidden from furloughing or laying off employees until Sept. 30 under the terms of a $2.2 trillion federal coronavirus stimulus package aimed at helping airlines retain staff as the pandemic crushes the travel industry.
"None of the decisions we've made so far have been more difficult than the decision we are announcing today," a United official told reporters during a Wednesday press call.
|UAL||UNITED AIRLINES HLDG.||33.79||-3.18||-8.60%|
United estimates that furloughs could impact 11,000 airport operations employees, 15,000 flight attendants, 5,500 technical operations employees, 2,000 flight operations employees and hundreds of other workers in catering operations, contact centers and network operation centers.
Another official added that the company decided to announce the potential furloughs to employees today to allow its teams "as much time as possible" to think about the impact furloughs will have on their careers.
The majority of employees will be able to rejoin United "as demand returns," the official said but added that the airline doesn't see business returning to pre-coronavirus demand until an effective COVID-19 vaccine or treatment is released into the market.
The airline is offering several voluntary programs that help employees retire, explore other industries and take voluntary unpaid leave. "Tens of thousands" of employees have already stepped up to take unpaid voluntary leave, and United has already started rolling out its plan to reduce its management and administration headcount by 30 percent, the official said.
United has been anticipating potential furloughs due to "reduced demand to destinations experiencing increases in COVID-19 cases and/or new quarantine requirements or other restrictions on travel," according to a regulatory filing with the Securities and Exchange Commission.
"We continue to offer voluntary programs and are moving forward with our management and administrative reorganization to align our payroll expenses with overall demand," a spokesperson for United Airlines told FOX Business in a Tuesday statement.
"And we're talking to our union partners to find creative solutions for our frontline employees, but it's possible we may need to use furloughs or other measures. This includes the likely scenario where we will issue WARN notices in July that signal furloughs that are effective Oct. 1."
Employees were first notified of potential furloughs on July 6, according to the filing.
A United official said during the Wednesday call that the airline has also cut executive salaries and raised, postponed non-critical projects and froze non-essential hiring, among other things, in its efforts to make sure "involuntary furloughs would be a last resort," but the airline is still "burning $40 million every day."
He added that the company cannot continue to rely on government aid to stay afloat as demand remains at record lows.
The SEC filings also show a significant decrease in domestic flight bookings since June 16 as COVID-19 cases across the country surge. United bookings from Newark, New Jersey, saw an 84 percent decline year-over-year and a 73 percent decline year-over-year at other airports, the filing shows.