United Airlines May Lay Off 36K Despite $5 Billion In Federal Aid

Eric Kiefer
Updated ·4 min read

NEWARK, NJ — Tens of thousands of workers with United Airlines may soon find themselves out of a job due to the financial impact of the coronavirus crisis, the company announced Wednesday.

During a media briefing, United Airlines spokespeople said nearly 36,000 of its frontline employees will be notified about potential furloughs on Oct. 1 under the Worker Adjustment and Retraining Notification Act (WARN).

“Importantly, not everyone who receives a WARN notice will be furloughed,” United spokespeople said. “We expect to offset these numbers through increased participation in new and existing voluntary programs as well as continued discussions with our union partners about creative ways to help reduce furloughs.”

United Airlines provided the following breakdown of potential layoffs:

  • Airport Operations - 11,082

  • Catering Operations - 808

  • Contact Centers - 983

  • Flight Operations - 2,250

  • In-flight Services - 15,100

  • Network Operations Center - 222

  • Technical Operations - 5,457

“While demand has trended slightly upward from its April low, our July scheduled capacity is expected to be down 75 percent compared to last year and we expect August scheduled capacity to be down 65 percent compared to last year,” company spokespeople said.

Given the recent resurgence of COVID-19 cases across the country, it’s “increasingly likely that travel demand will not return to normal until there is a widely available treatment or vaccine,” United spokespeople stated.

“The reality is that United simply cannot continue at our current payroll level past October 1 in an environment where travel demand is so depressed,” spokespeople said.

$5 BILLION IN CARES ACT FUNDS

United Airlines received roughly $5 billion in emergency aid from the federal government through the payroll support program of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The CARES Act provides $58 billion in grant and loan assistance for airlines to offset the devastating impact of the COVID-19 pandemic on the industry. But the legislation also restricts the use of the bailout funds, including a ban on using the funds for stock buybacks. The act also required airlines to maintain their staffing levels for a certain period of time.

However, the potential layoffs at United Airlines comply with the restrictions of the CARES Act because they wouldn’t become effective until Oct. 1, a spokesperson told Patch.

Wednesday’s announcement may not come as a complete surprise to some elected officials and labor unions, who have expressed worry that despite the massive federal bailout, United and other leading airlines will still be laying off large numbers of workers.

In May, U.S. Rep. Donald Payne Jr., who represents New Jersey’s 10th District, reached out to former United Airlines CEO Oscar Munoz, telling the company that he was worried about potential layoffs at Newark Airport, where the airline has a hub.

Payne said he sympathizes with struggling airlines, and is aware that the COVID-19 pandemic has "caused unprecedented disruption in the air travel sector." He also complimented United for "years of support" for his district.

But dipping revenue streams aren't a free pass to make an end zone run around the spirit of the CARES Act, he added.

In June, labor union Unite Here charged that United slashed hours for nearly 2,500 of its catering workers by as much as 25 percent, including employees in Newark, Houston, Denver, Honolulu and Cleveland.

“We're sick of giant corporations like United getting big handouts, only to game the system and leave workers behind,” International President D. Taylor said.

United Airlines has emphasized that its frontline workers aren't the only ones feeling the financial pain; its management and administrative teams have also been seeing a reduction in hours.

“We are living through the most disruptive financial crisis in the history of commercial aviation,” company spokespeople said Wednesday. “And since the early days of this global pandemic, we’ve taken bold steps to try and stay a step ahead of COVID-19’s devastating impact on travel demand.”

United spokespeople said the company has been “aggressively cutting costs” since late February. Money-saving steps included:

  • “Suspended our share repurchase program in February and terminated it in April”

  • “Reduced planned full-year adjusted capital expenditures by approximately $2.5 billion”

  • “Eliminated CEO and president base salaries through the end of 2020 and temporarily reduced officer salaries”

  • “Suspended raises and implemented a schedule reduction for management and administrative employees”

  • “Slashed our domestic and international schedules”

  • “Instituted a hiring freeze for nonessential workers”

  • “Slashed spending on vendors and outside contractors”

  • “Offered voluntary unpaid leaves of absence for U.S.-based employees -- with more than 20,000 employees now participating”

Send local news tips and correction requests to eric.kiefer@patch.com

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This article originally appeared on the Newark Patch