United Airlines is preparing to furlough up to 36,000 employees -- as much as 45% of its front-line U.S.-based workers -- as the coronavirus pandemic ravages the airline industry.
United Airlines said almost half of its U.S.-based workers face the potential job cuts on or shortly after Oct. 1, as the federal requirement under the Payroll Support Program (PSP) prohibiting airlines from involuntary layoffs is set to expire. United currently employs 95,000 people globally.
"None of the decisions so far have been more difficult as the decisions that we are announcing today," A United executive said, referring to the involuntary furloughs as the company's "last resort."
In an attempt to avoid layoffs, United implemented a variety of cost-cutting measures such as slashing domestic capacity, eliminating executives' salaries and freezing non-essential hiring. However, the airline is still burning through $40 million a day.
Demand for air travel steadily increased in recent weeks, but rising coronavirus cases and state quarantine rules have threatened the small signs of recovery. After New York Gov. Andrew Cuomo announced travelers from hot spot states would have to quarantine for two weeks, United saw a "noticeable decline" in demand for travel to New York, executives said.
The carrier will send out notices this week to potentially affected employees -- more than 15,000 flight attendants, 2,500 pilots, and 11,000 customer service and gate agents. For front-line employees, layoffs will be based on seniority. For management and administrative staff, layoffs will be determined by performance, according to executives.
The ultimate number of furloughs will be determined in mid to late August. Around 3,700 front-line employees have already agreed to voluntary separation packages, and United executives explained that if more people opt to take voluntary leave it would significantly reduce the number of jobs they would have to cut in the fall.
"Involuntary furloughs that we worked so hard to avoid are now the last option left to protect the long term interests of the company," a United executive said.
Other major U.S. airlines are expected to lay off employees in October when they are no longer tied to the conditions set forth by Congress to receive federal aid. Unions representing front-line workers are calling for an extension of the 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," President Sara Nelson, who represents United flight attendants, said in a statement. "Failing to maintain this successful jobs program will have a ripple effect across the economy."
United executives say they are not counting on the likelihood that Congress would be able to approve more assistance "in an election year."