United Airlines, its plans for a business recovery upended by a surge in coronavirus cases, has begun notifying tens of thousands of employees about potential layoffs or furloughs starting Oct. 1.
The carrier has authorization for $5 billion in grants or loans under the federal CARES Act, but the measure’s protections against job reductions expire Sept. 30. United already has announced its intention to cut 3,400 of its managers, about 30% of its total, a move expected to take a chunk out of its Chicago headquarters.
Just a week ago, United said an increase in bookings would allow it to triple its August schedule, bringing it to 40% of its level from a year ago. But in a presentation to employees Monday, United said cancellations have risen again as state and local governments, including Chicago, issue quarantine orders covering travelers from coronavirus hot spots.
A United executive confirmed a Wall Street Journal account of the presentation and its warning of tens of thousands of layoffs or furloughs, with some notices going out this week. The exact number couldn’t be determined. The airline’s parent company, United Airlines Holdings, said at the end of 2019 it had 96,000 employees.
Tuesday, the U.S. Treasury Department said United and four other carriers have signed letters of intent for additional loans available under the CARES Act. United had applied for $4.5 billion in loans secured by warrants for stock issued to the Treasury Department.
Advance notice of job reductions would be made under the federal Worker Adjustment and Retraining Act, or WARN. Illinois has a version of the WARN act with slightly different rules, but the same 60-day notice requirement as federal law. The notices cover the possibility, but not the certainty, of job losses.
The Illinois Department of Commerce and Economic Opportunity posts companies’ WARN notices early in each month. It has not yet provided the notices received in June, but a spokesperson said United has made no filing.
Chicago’s order of a two-week quarantine for travelers arriving from 15 states could affect demand at its O’Hare Airport hub. United also cited to employees a drastic falloff in bookings at its Newark, New Jersey, hub because states in the northeast have issued similar quarantine rules.
Labor unions in the United workforce said they are aware of the potential for job losses. Jonathan Battaglia, spokesman for the International Association of Machinists and Aerospace Workers, said, “Potential furloughs in October have been widely known by our members since the CARES Act was passed in March. We are working to secure an additional six months of federal payroll support that would extend into 2021.”
The Association of Flight Attendants said last week that workers at American and Delta airlines have begun receiving WARN notices. It has issued a similar call for a six-month extension of federal aid.
United and other major carriers have been offering workers early retirement packages or voluntary furloughs, often under the terms of union contracts, to reduce payrolls without resorting to layoffs. In its offer to managers, United is trying to get some to leave before Oct. 1, offering them severance and extended health coverage that won’t be available if they are later laid off.
