United Airlines has this week issued a shocking warning to employees. The big question is whether this is just an honest assessment of the situation, or whether there’s an ulterior motive in the way that this is presented.
In this post:
United Airlines could furlough 36K employees
The funding that US airlines received through the CARES Act precludes them from laying off any employees through September 30, but all bets are off as of October 1. It’s becoming increasingly clear that we should expect lots of layoffs as of then.
This week United Airlines sent out a letter informing employees of upcoming involuntary furloughs. The company makes it clear that roughly 36,000 United Airlines frontline employees are being notified that they may be subjected to a furlough come October 1, under the Worker Adjustment and Retraining Notification Act (WARN).
Here’s how the potential 35,902 furloughs are broken down by function:
- Airport operations — 11,082 people
- Catering operations — 808 people
- Contact centers — 983 people
- Flight operations — 2,250 people
- Inflight Services — 15,100 people
- Network Operations Center — 222 people
- Technical Operations — 5,457 people
The company does clarify that not everyone who receives a WARN notice will be furloughed. Rather, the company expects to offset these numbers through:
- Increased participation with new and existing voluntary programs
- Continued discussions with unions about creative ways to help reduce furloughs
A few months back, United’s (now) CEO, Scott Kirby, said the following:
“Our number one overriding priority and objective is to make sure we get the company through the crisis and through to the other side. That is by far the number one objective. And the second objective is to do that without any involuntary furloughs… I can’t promise that it won’t get bad enough that we’ll have to do that. I will tell you if it gets to the point where waiting to do that jeopardizes number one, which is making sure jobs are here for the next 10 to 20 years, we’ll reluctantly do it. But those are our two objectives as we go through this.”
United Airlines could furlough up to 36K workers
United Airlines’ furlough numbers seem high
Obviously the current situation in the airline industry is dire. There are no two ways about it. However, United’s furlough numbers do seem significantly higher than than those of competitors.
United is looking at furloughing 40% of its frontline workers. American Airlines, on the other hand, claims to have 20,000+ too many employees. American has a larger workforce, so United is looking at significantly more furloughs.
In fairness, United has been transparent from day one that there will likely be furloughs come October 1, even on the same day that the company accepted CARES Act funding.
United could furlough 40% of its workforce
Flight attendant union calls this “honest assessment”
Sara Nelson, a United flight attendant and President of the Association of Flight Attendants (and often referred to as America’s most powerful flight attendant) says in a Twitter thread that these projected numbers “are a gut punch, but they are the most honest assessment we’ve seen on the state of the industry.”
She goes on to suggest that the payroll support program being offered for the airline industry is so far the most responsible use of public money in the crisis, and needs to be extended:
“The PSP is an historic workers first program: effective at saving jobs, transparent in application, & so far the most responsible use of public money in this crisis. We need to extend it and expand it for all working people and create the jobs necessary to fight the virus.”
THREAD: The United Airlines projected furlough numbers are a gut punch, but they are also the most honest assessment we've seen on the state of the industry – and our entire economy. 1/8
— Sara Nelson (@FlyingWithSara) July 8, 2020
That seems like a real stretch to me:
- For how long should the federal government fully bankroll airline employee salaries, given that it’s expected to take years and years for demand to recover?
- I absolutely think the federal government needs to do more to help individuals here, but it’s not just the airline industry suffering
- I hardly think paying a senior captain’s $300K salary in full while doing very little for people in virtually all other industries is “the most responsible use of public money in this crisis”
For how long should payroll support be maintained?
This seems like a negotiating tactic to me
Don’t get me wrong, the situation is dire, and it’s going to take years for there to be a full recovery. However, when push comes to shove, I don’t think the airline would actually lay off 40% of workers. Rather I suspect the company is sharing the absolute worst case scenario, with three goals:
- Getting more payroll support from the government, first and foremost
- Using this as a negotiating tactic with unions; however, since the head of the union is onboard with this projection, this might be less of a factor than we’d otherwise assume
- To get more employees to accept voluntary separation packages
It’s so incredibly unusual to see the head of an airline and head of a union agree on something that involves employees being furloughed, so I feel a bit like I’m in the twilight zone. But I guess they have the mutual goal of getting more help from the government.
Clearly United is hoping for more payroll support from the government
Bottom line
United Airlines is projecting that up to 40% of frontline workers could be furloughed, which is a somber reflection of the situation the airline industry is in. I feel really bad for all the employees in the airline industry who are worried about their job prospects.
Personally I don’t think the actual furlough numbers will be quite as high as this projection. Rather this largely seems intended to get more payroll support from the government.
That’s a concept I just can’t get behind, at least not without some changes. While I don’t mind the government doing something to help airlines — and ideally other industries as well — keeping everyone on the payroll indefinitely simply isn’t it.
What do you make of United Airlines’ furlough projections?
https://ir.united.com/index.php/sec-filings/sec-filing/8-ka/0001104659-20-101912 filing of above.
https://www.cnbc.com/2020/09/02/united-airlines-cuts-jobs-as-coronavirus-hurts-air-travel-demand.html
I’m a UA captain and I just took a $100,000/year pay cut under CARES. The airline has ways to do this by reducing hours, demotions, etc. (Regardless of what is being sold as fact).
I’m not complaining. I post this as an FYI to those who are wondering.
Agree with pretty much everything you said. The numbers may also be on the high end because they are giving out the worst case scenario. Its best to be open about it instead of low balling the estimates and then finding out they gotta furlough more than they initially thought. The US is going backwards. States are being forced back into shutdown. The president is pushing to force the reopening of schools. CDC is saying...
Agree with pretty much everything you said. The numbers may also be on the high end because they are giving out the worst case scenario. Its best to be open about it instead of low balling the estimates and then finding out they gotta furlough more than they initially thought. The US is going backwards. States are being forced back into shutdown. The president is pushing to force the reopening of schools. CDC is saying this action will put the country at the highest risk. In the end the federal government may fully kill our economy when everything is forced into shutdown. There isn't going to be demand for air travel. There isn't going to be a frickin viable national economy. I fail to see any reason why the government should prop up airlines going forward. Airlines are not coming back for a long time. That is the cold hard reality.
Of course AA and UA are saying different things. AA is trying to convince people they're not going bankrupt so they said they'd be flying 75% of last summer's schedule. United, on the other hand, has repeatedly been playing the vastly different story of this being a very long recovery and trying to get employees to take voluntary separation packages and potentially more government money.
It's really quite transparent.
SAS plans to lay off up to 50% of their staff. I think we can expect tough times for the airline industry worldwide.
Good article. I really like the observation of the taxpayer paying 300K USD to a pilot.
Isn't it interesting America's view of "socialism"? Helping those who will make the most noise while ignoring the most needy. A new twist on "rugged individualism".
What are all of United’s Karens going to do? Maybe TSA or USPS could hire them, then they can continue to yell at customers.
SEM wrote "If he looses his 300k salary it [more then likely] will hurt just as much as a 80k salaried individual, or a 50k individual, or…, or…, or… and so on…"
Studies clearly show this is not true. Low wage earners spend the vast majority of their income on housing and food. As incomes rise a household spends an every increasing amount on discretionary purchase such as recreation (think snowmobiles and jet skis), travel...
SEM wrote "If he looses his 300k salary it [more then likely] will hurt just as much as a 80k salaried individual, or a 50k individual, or…, or…, or… and so on…"
Studies clearly show this is not true. Low wage earners spend the vast majority of their income on housing and food. As incomes rise a household spends an every increasing amount on discretionary purchase such as recreation (think snowmobiles and jet skis), travel (Disneyworld), clothing, big TVs etc.
Low income households rarely have enough income to save. High income households save a significant portion of their earnings. You can check the savings rate by household income as these numbers are readily available but given the cost of living any pilot earning $100k/year let alone $300k should have substantial money put aside and available to get them through a substantial period of unemployment.
If anyone should be getting help its the low income airline employees although it's unclear why they should be treated differently than someone working in a restaurant or a hotel.
Are pilots on 300k (not that there will be many) really getting paid full whack under cares act finding?
If so then that’s a failure of Congress not to put limits in.
In general for example U.K. scheme reimburses employers for 80% of salary to a maximum of £2,500 per month - about $3,100. Employers can pay salary levels above that but they get no reimbursement for it.
yes, a Captain makes 300K and lives a lifestyle supported by years of high earnings and yes it hurts just as much as someone who's making 80K a year. Point being the Captain CAN down grade his lifestyle and if he's been smart has not been living paycheck to paycheck and has some savings. Someone that works at the local mill and makes 30K a year may not have an option to live an even...
yes, a Captain makes 300K and lives a lifestyle supported by years of high earnings and yes it hurts just as much as someone who's making 80K a year. Point being the Captain CAN down grade his lifestyle and if he's been smart has not been living paycheck to paycheck and has some savings. Someone that works at the local mill and makes 30K a year may not have an option to live an even lower lifestyle as there is a minimum cost of living and substance. I'll be contacting my representatives and let them know we're all hurting, the Airline Industry will have to hurt with us. Based on my international travel on US carriers this would be a good time to clean out the retired on the job senior service staff!
People don’t understand that airline is national security to the US. There’s no other effective mean of transportation other than the airline industry. The government need to keep them afloat. It’s part of essential services just like utilities. If there’s no service (every airline go under) there will be civil unrest just like there’s no electricity or running water (do we not have enough of them already).
It’s interesting how there’s no discussion like...
People don’t understand that airline is national security to the US. There’s no other effective mean of transportation other than the airline industry. The government need to keep them afloat. It’s part of essential services just like utilities. If there’s no service (every airline go under) there will be civil unrest just like there’s no electricity or running water (do we not have enough of them already).
It’s interesting how there’s no discussion like redundancy like in emirates thread. So many bashing Emirates for laying people off but when it comes to Americans company everyone think they’re the best employers. Great!
I say no more free cheese. This has to end and it will be painful but it has to be done. Everyone thinks the feds borrowing money to pay them to sit on their butts is a good idea.
I think the union's comments are meant in hopes of getting more bailout money, if that isn't coming then I think the comments are going to be quite different.
There is no reason to extend payroll just for airlines, as other businesses are still suffering too. If they extended it, then they also need to extend PPP. Otherwise is would be unfair for taxpayer to fund just airlines jobs. Also they need to take some kind of paycut on these payroll. As Ben mentioned, it is unforgivable for taxpayers to bankroll 100k+ salaries for doing nothing.
The fact that a Senior Capt makes 300k [ I do not know this, I am taking Ben's word, which I am sure is true as their contract is public knowledge] doesn't matter...Just like the rest of us that Senior Capt lives a life style that his salary/career affords...Everyone seems to forget this when talking about any highly compensated individual...If he looses his 300k salary it [more then likely] will hurt just as much as...
The fact that a Senior Capt makes 300k [ I do not know this, I am taking Ben's word, which I am sure is true as their contract is public knowledge] doesn't matter...Just like the rest of us that Senior Capt lives a life style that his salary/career affords...Everyone seems to forget this when talking about any highly compensated individual...If he looses his 300k salary it [more then likely] will hurt just as much as a 80k salaried individual, or a 50k individual, or..., or..., or... and so on...
I think Ben gets it right. Why should airline employees, especially highly paid pilots who presumably are in a good position to weather a period without their full income immune from being laid off whereas everyone else is not?
The objective was to keep the airlines from going bankrupt, not to cut the airline employees a special deal that protects just them..
Let the airline lay the workers off. They can draw unemployment just like everyone else.
This is nothing more than an egregious scheme to swindle more bailout money from the government.
If United Airlines were serious about reducing the number of furloughs, they would be taking more steps to generate additional revenue using nontraditional methods.
Demand for air travel is low...so why have prices on future flights not been reduced to commensurate levels to encourage more sales? They still have a flexible booking policy, so this isn’t exactly requiring...
This is nothing more than an egregious scheme to swindle more bailout money from the government.
If United Airlines were serious about reducing the number of furloughs, they would be taking more steps to generate additional revenue using nontraditional methods.
Demand for air travel is low...so why have prices on future flights not been reduced to commensurate levels to encourage more sales? They still have a flexible booking policy, so this isn’t exactly requiring people to commit to travel during the peak of a pandemic. Airfare can be purchased up to 330 days in advance. A lot can change between now and next spring. Better yet, why not start selling electronic travel vouchers at a discount and offer a two year expiration?!? The more you buy, the greater the percentage discount. For example, I just performed a quick search and UA airfare prices for R/T economy IAD-SFO-LIH around Christmas to New Years is still $900+. Lower the price to $600, I’ll take a calculated risk at this price, part with the money, and now United has more funding to help pay salaries in the near-term. Repeat 10 million times for other customers and start operating more like a business and less like a panhandler at a busy intersection.
I'm sure the administration will want to avoid the news of such a high-profile wave of layoffs just before the election. They're already going to be spinning wildly in October, denying the projected 200,000 deaths from COVID, so they'll need to address this wave of layoffs.
Expect an emergency extension of the CARES act for an additional 34 days.
I am a big fan of UA since they inherited me from CO so I come to this conversation as a friend. Based on UA's own traffic projections, which seem reasonable, the furlough numbers just don't sound right. I am certain this is a negotiating tactic to get "more", whatever more turns out to be. UA and Sara are setting the stage.
Problem is, there are many groups/segments in the US that also need a...
I am a big fan of UA since they inherited me from CO so I come to this conversation as a friend. Based on UA's own traffic projections, which seem reasonable, the furlough numbers just don't sound right. I am certain this is a negotiating tactic to get "more", whatever more turns out to be. UA and Sara are setting the stage.
Problem is, there are many groups/segments in the US that also need a boost to keep going and so far have been left out. I am an owner of a small business. My suppliers in Asia were shut during 1st quarter and my customers (USA Corps and retailers) were in lockdowns during Q-2. Here we are in Q-3 and everyone is scared as hell over where their next check is coming from and scared of the virus itself. Luckily, I have been able to see my family through on savings as I have not received any PPP and my revenues have been zero. I am using my company as an example, not throwing a pity party. There are thousands of small businesses like mine. Some may get some help or have sufficient savings but many do not.
Schools are trying to make plans to open up for the fall and it looks like if you are not a DeVoss type private school, there will be no help from the Feds for public schools and State and local governments are drained by high Covid expenses juxtaposed with a shrinking tax base.
Speaking of Covid, I have not seen many initiatives to help first line responders, many of whom will have to deal with childcare if the schools end up only partially open and virtual for the rest (not that many K-12's have that together yet).
Sorry to ramble but my point is: UA, you will need to get in line with the rest of the country. There is tremendous need and suffering out there. Don't worry, I'll be buying those P class tickets again ASAP and I won't sell my UA stock.
Sorry Sara, I do not agree the PSP has been the most responsible use of public money. There are millions of people out of a job in several industries. It's not appropriate that those in the airline industry get full pay and benefits, while those laid off in other industries lose benefits and must get by with unemployment.
Everyone is trying to predict how air travel will be in say 3 months time but I think all the models the industry is using are pointing towards no tangible growth until Spring/Summer 2021 at the minimum. With the winter flu season bearing down on us in November through March it will be hard without mass testing to distinguish between flu and cold symptoms from CV19 so airlines have a huge headache on how to...
Everyone is trying to predict how air travel will be in say 3 months time but I think all the models the industry is using are pointing towards no tangible growth until Spring/Summer 2021 at the minimum. With the winter flu season bearing down on us in November through March it will be hard without mass testing to distinguish between flu and cold symptoms from CV19 so airlines have a huge headache on how to programme Q4 of 2020 and demand, I fear a lot more airlines will furlough in the coming weeks.
The numbers don't add up...
United is supposed to be at 35% or 40% capacity in August.
You mean to tell me they plan to stay at 35% during Thanksgiving, Christmas, Spring break and Summer 2021?!
Meanwhile, AA released a schedule of being back at 75% capacity by Summer 2021 and being overstaffed by 7,000 or 8,000 FA's.
7,000 AA FA's vs 15,000 UA FA's facing possible involuntary forloughs.
The numbers do not add up to me for UA...
I wouldn't call this a threat. we all knew this is coming.
Loads are down 75%. Why does it seem unreasonable that they are 45% overmanned?
We may complain about service and quality , however no one wants all these numbers of staff to lose their jobs. I understand over 60 million people work in the industry worldwide. Multiply that by family members and I guess it could be as 300 million affected by this calamity Add to that all the other airport workers , hotels , restaurants etc. People who don’t travel don’t spend money to go the the theatre , concert and so forth. The knock on affect is tremendous