United Airlines warns 36,000 employees of potential job cuts

CNBC's Phil LeBeau reports on how the drop demand for flights has led United Airlines to warn thousands of employees there may be layoffs. Subscribe to CNBC PRO for access to investor and analyst insights on airlines and more: https://cnb.cx/2BT2E7y United Airlines on Wednesday said it is warning about 36,000 front-line employees — more than a third of its staff — about potential furloughs as the coronavirus pandemic continues to roil travel demand. The potential for the mass job cuts, the largest announced by a U.S. airline so far, comes signs of a recovery in air travel fade with new coronavirus infections and travel restrictions. Federal law requires employers to give staff notice about possible layoffs or temporary furloughs 60 days in advance. United and other airlines that took $25 billion in federal payroll support are prohibited from laying off, furloughing or cutting the pay rates of staff until Oct. 1. In a memo sent to employees Wednesday, United said workers who receive a WARN notice may not get furloughed. The company said it will exhaust voluntary measures before cutting workers. Some of the workers may be called back to work but that will depend on a return to demand, which some industry executives say could take years. “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,” the carrier said in its staff note. “And involuntary furloughs come as a last resort, after months of company-wide cost-cutting and capital-raising.” United shares fell further after its announcement, trading about 3% lower, while the S&P 500 was up 0.2%. The furloughs would apply to unionized workers and warnings are going to some 15,000 flight attendants, more than half of the airline’s cabin crew, and more than 2,200 pilots. The airline also said more than 4,500 mechanics and technicians as well as more than 11,000 airport operations staff will receive WARN notices. “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,” said Sara Nelson, a flight attendant for the airline and president of its labor union, the Association of Flight Attendants. United, Delta and American and other airlines have been urging workers to take early retirements, buyouts and other voluntary measures as the carriers scramble to cut costs. But travel demand is a fraction of last year’s — just as the peak summer travel season hits. That presents a bleak outlook for the industry and voluntary measures may not be enough to reduce airlines’ costs to match weak demand. » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC #CNBC #CNBCTV