US Airlines Prepare For Next Round Of Employee Cuts

In what’s becoming an almost routine ritual, airline CEOs in the United States are warning of further furloughs from April. Across the industry, tens of thousands of airline industry employees were involuntarily furloughed when the first round of CARES Act assistance ran out in October. Most of those employees went back onto the payroll when Washington ticked off on a second round of assistance in late 2020. But that’s set to expire on April 1, and CEOs now warn of further pain for their employees.

United States-based airlines are warning of further furloughs. Photo: Tom Boon / Simple Flying

United Airlines send out 14,000 WARN letters in January

Last week, United Airlines sent out Worker Adjustment and Retraining Notices (WARN letters) to around 14,000 employees. This letter indicated they face possible furloughs in April. After issuing 36,000 WARN letters in July, United Airlines ended up furloughing around 13,000 employees in October when the first tranche of CARES Act funding ran out.

Most of those employees came back onboard when the second round of funding began. But with the second round of funding due to expire on April 1, and the airline industry remaining in the doldrums, United is prepping its employees for further furloughs in April.

“Customer demand has not changed much since we recalled those employees. When the recalls began, United said most recalled employees would return to their previous status as a result of the fall furloughs around April 1.  As such, recalled employees in states where WARN may be triggered are receiving notice about this today,” Simple Flying reported a United Airlines spokesperson saying last week.

United Airlines issued 14,000 WARN letters in January. Photo: Tom Boon / Simple Flying

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American Airlines warns of possible further furloughs

Now American Airlines is forewarning of further possible furloughs. American’s CEO, Doug Parker, got asked about furloughs during an earning’s call last week. When the first round of CARES Act funding run out last year, American Airlines furloughed around 19,000 employees, or almost 14% of its total workforce. American Airlines received a further US$1.5 billion in the second round of funding to get those furloughed employees back onto the payroll.

To state the obvious, April 1 is approaching and demand hasn’t got much better. So we’re definitely going to need to address this,” said Mr Parker. “We’re already talking to our unions about what we’re going to do.”

To date, competitor airlines Delta Air Lines and Southwest Airlines have avoided involuntary furloughs. But neither airline rule them out in the future.

Between them, these four airlines posted losses of US$31.2 billion in the 2020 calendar year. The various CEOs’ problem is that there’s no improvement in travel demand on the immediate horizon. Doug Parker called 2021 a year of recovery but said he couldn’t say exactly when passenger demand would return. American Airlines expects its first-quarter 2021 system-wide capacity to be down 45% on 2019 levels. Total revenue is expected to drop by 60% to 65%.

Doug Parker Getty
Airlines and unions are campaigning for a third round of payroll assistance. Photo: Getty Images

United Airlines expects first-quarter 2021 capacity to be down at least 51% compared to the first quarter of 2019. United also expects the first quarter 2021 total operating revenue to be down 65% to 70% compared to the first quarter of 2019.

A third round of payroll funding?

Meanwhile, the airlines and various unions are advocating for a third round of payroll assistance to keep airline employees at work. But in the absence of that and a sudden uptick in travel demand, further furloughs may be inevitable.

What do you think? What are the chances of a third round of payroll assistance from Washington? Do you favor it? Post a comment and let us know?