United Airlines could lay off up to 36,000 workers

Meanwhile Ryanair cabin crews have agreed to pay cuts to stave off the threat of losing their jobs

by AFP
United Airlines could lay off up to 36,000 workers
A United Airlines Boeing 787-10 Dreamliner makes its approach for landing at Amsterdam's Schiphol Airport on July 2, 2020, after a flight from New York. United is the third largest airline in the world and a member of Star Alliance. It has warned that it may need to make large staff cuts because of the aviation crisis. Photo: Nicolas Economou/NurPhoto via AFP.

United Airlines warned on Wednesday that it could lay off as many as 36,000 workers on October 1 as the US carrier fights for survival amid the coronavirus crisis.

The big US airline emphasised that it must cut costs due to a severe drop in demand for air travel, but although it will notify frontline employees of the potential job cuts, it does not expect everyone who receives the notice to be furloughed.

"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," United said in a memo to employees. 

That level of job cuts would account for close to 38% of United's total headcount as of the end of March.

United does not expect travel to normalise "until there is a widely available treatment or vaccine" for Covid-19, the memo said. 

The "involuntary furloughs come as a last resort, after months of company-wide cost-cutting and capital-raising."

United is targeting 15,100 staff cuts in inflight services, including flight attendants, and 2,250 pilots. Other groups affected include catering, airport operations and technical operations.

The company extended a deadline under a voluntary departure program until July 15, and said it was "hopeful" that program would reduce the number of involuntary departures. 

United also said it was in talks with unions "about creative ways to help reduce furloughs."

'Gut punch'

Faced with deep declines in revenues, major US airlines have delayed new jet orders, retired older aircraft and grounded much of their fleet to try to limit cash burn.

As part of the Cares Act relief program for airlines, United received $5 million in payroll support and loans but under the terms of the program cannot lay off workers until after September 30.

Sara Nelson, president of the Association of Flight Attendants, called the United announcement a "gut punch" and warned that layoffs will be repeated by other carriers unless Congress extends the payroll support program (PSP).

"Congress must extend the PSP in order to avoid hundreds of thousands of layoffs from an industry that normally drives economic activity for every other sector and supports more than 11 million jobs," she wrote on Twitter. "Failing to do so will have a ripple effect across the economy."

In early June, United and other carriers added flights for the summer in reaction to a better-than-expected jump in demand following the reopening of much of the US economy after closures imposed amid the pandemic.

However, United said in a securities filing on Wednesday that it was cutting back some flights in August following the latest spike in Covid-19 cases in southern and western states that has prompted New York and some other states to impose quarantines on visitors from hotspot areas, and reimpose some restrictions.

Shares of United fell 3.4% to $31.44 in early afternoon trading. 

Ryanair crew take pay cuts

Budget airline Ryanair has agreed to retain the jobs of all UK-based cabin crew in return for pay cuts, it was announced by trade unions on Wednesday.

The deal, which will see salary reductions of up to 10% spread over four years, has been agreed by Ryanair members of the Unite union following a vote.

"Unite has been contending with an incredibly difficult set of circumstances in the aviation sector," Diana Holland, the union's assistant general secretary said in a statement.

"The agreement with Ryanair shows that the company has taken a more constructive and less damaging approach to dealing with the issues than many of its competitor airlines."

The deal for cabin crew follows a similar agreement announced between the Dublin-based no-frills Irish carrier and a separate union, Balpa, in which pilots agreed to a 20% pay cut to save jobs, although there could still be some redundancies among flying staff.

And it comes after a Ryanair announcement in May that the airline was planning to cut 3,000 jobs because of the collapse of the aviation industry in the wake of the coronavirus pandemic.

Earlier this month, Ryanair said its passenger numbers for June had fallen by 97%.

It carried 400,000 passengers in June 2020 compared to 14.2 million in the same month 12 months earlier.

The deal for Ryanair staff comes amid uncertainty for other airlines including British Airways which has announced the possibility of 12,000 job cuts.