United Airlines issues notice of a potential layoff to 36,000 employees

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Jul 8, 2020
  • United Airlines issues notice of a potential layoff to 36,000 employees .
  • The U.S. airline says it will prioritise voluntary measures to cut its workforce.
  • Labour unions want U.S. Congress to extend payroll support until March.

United Airlines (NASDAQ: UAL) said on Wednesday that it had issued notice to roughly 36,000 of its frontline employees about a potential layoff as COVID-19 continues to wreak havoc on the global airline industry. The potential job cut represents more than 33% of United’s workforce. United Airlines named Brett Hart as the next president to succeed Scott Kirby in May.

Shares of United Airlines opened about 3% down on Wednesday. At £25 per share, the air carrier is currently 65% down year to date in the stock market after recovering from a low of £17 per share in March. Learn more about how to choose winning stocks.

United Airlines to prioritise voluntary measures to cut its workforce

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The U.S. Federal law directs employers to give a 60-day notice to their staff about a potential job cut or temporary furlough. The state-backed payroll support programme disables the U.S. airlines from cutting staff salaries or laying off workers before 1st October.

In its memo on Wednesday, United Airlines also highlighted that the warning doesn’t necessarily imply that workers will be laid off. According to the air carrier, its first priority is to tap into voluntary measures, including buyouts and early retirements, to reduce the size of its workforce before it resorts to cutting workers.

Even if the workers are furloughed, United added, some of them may be called back once the demand for air travel recovers and passenger numbers start to improve. The U.S. airline that has sent a notice to around 15,000 flight attendants (over 50% of its cabin crew) and 2,200 pilots said that its furlough will affect unionised workers.

Labour unions want U.S. Congress to extend payroll support until March

As per United’s executives, demand showed early signs of recovery in June as the government eased COVID-19 restrictions, but the passenger numbers have tanked again in recent weeks as Coronavirus cases continue to rise sharply in the U.S. leading again to potentially prolonged travel restrictions.

As of December 2019, United Airlines had a global workforce of 96,000 employees. The air carrier is currently in talks with its labour union for pilots over early retirements. Multiple labour union, including the Association of Flight Attendants (AFA), requested the U.S. Congress last month to consider extending its payroll support for airlines until end of March 2021.

United performed slightly upbeat in the stock market in 2019 with an annual gain of about 7%. At the time of writing, the Chicago-headquartered company is valued at £7.25 billion and has a price to earnings ratio of 8.55.

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