United Airlines to Lay Off Up to 36,000 US Employees in October

In a memo to employees on Wednesday, the Chicago-based airline said 36,000 employees, or 45% of its front-line workers in the USA and more than a third of its overall workforce of 95,000, face layoffs on or around Oct. 1, USA Today reported.

The most affected groups: flight attendants and airport customer service and gate agents, which account for 26,000 of the 36,000.

The airline calls them involuntary furloughs because most of the affected employees will be eligible to be recalled when travel demand returns under terms of their union contracts.

Airlines are prohibited from laying off workers until Oct. 1 under the payroll protection provisions of the federal Coronavirus Aid, Relief and Economic Security Act.

United received a $3.5 billion grant and $1.5 billion loan for payroll protection. The program was designed to stabilize airlines and keep workers employed until they could shrink their businesses to the travel reality brought on by the coronavirus pandemic.

United executives said in a briefing with reporters that they hope the final tally, which will be known in mid- to late August, will be less than 36,000 as more employees accept voluntary exit programs. The airline extended the application window for its voluntary separation program to July 15 to encourage more employees to sign up. The 36,000 does not include 1,400 previously announced layoffs of management and administrative employees.

"After months of aggressive cost-cutting and proactive capital-raising, today we updated employees about a topic we’ve always dreaded and the action that was always a last resort in the context of this COVID-19 pandemic: involuntary furloughs," the statement began.

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

The airline had to put a number on the cuts because of federal requirements to warn employees about mass layoffs.

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 & 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 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 percent to $31.44 in early afternoon trading.