United Airlines said Wednesday it plans to lay off up to 16,000 workers starting in October amid a prolonged industry downturn due to the coronavirus.
The big US carrier, which had previously said as many as 36,000 workers could be terminated, said early retirement and other programs had lessened the need for even deeper cuts, but the ‘devastating’ impact of COVID-19 on airline travel still required layoffs.
Even with those voluntary programs and other cost-cutting, the savings ‘have not been enough to avoid involuntary furloughs entirely,’ the company said.
‘Today, each of our operations leaders communicated directly with their teams to share the heart-wrenching news that approximately 16,000 United employees will be notified of an involuntary furlough effective as early as October 1.’
The cuts affect nearly 7,000 flight attendants and almost 3,000 pilots, among other staff.
‘The pandemic has drawn us in deeper and lasted longer than almost any expert predicted, and in an environment where travel demand is so depressed, United cannot continue with staffing levels that significantly exceed the schedule we fly,’ the company said.
‘Sadly, we don’t expect demand to return to anything resembling normal until there is a widely available treatment or vaccine.’
United was among the airlines that received federal funding under the federal Cares Act, which barred involuntary staff cuts through the end of September.
United said it was working with its unions to press the government to provide another emergency aid package with an extension of payroll support for airline workers.
However, that bill remains stuck in a partisan fight in Washington.
‘Flight attendants are resilient in the face of adversity, 1st responders. Pilots spend years training to acquire skills & knowledge to fly the public safety,’ the Association of Flight Attendants tweeted late on Tuesday.
‘Inaction by Congress will now send us to the unemployment line.’
The news of the layoffs appears to have been well-received on Wall Street.
When the news was announced around mid-day, the share price jumped by about a dollar. As of around 2pm local time in New York, United was trading at around $36 a share.
The latest changes come at a time when major airline carriers are in desperate need of more revenue, as demand for air travel has plummeted with the coronavirus pandemic continuing to wage on.
The US Department of Transportation’s Bureau of Transportation Statistics said on August 10 that airline passengers in June had dropped 80 per cent from where they were in 2019.
That is not as bad as in April and May, when passengers had decreased 96 per cent and 90 per cent, respectively, compared to 2019’s figures.
The Transportation Safety Administration has released figures showing how far air travel has dropped off since the middle of March, when coronavirus concerns began to hit the US hard and states began going into lockdown mode.
Video: Delta CEO on eliminating change fees for travel within the US (CNBC)
On March 1, the TSA said it had screened more than 2.28million travelers, close to the 2.3million travelers it had screened on the same day in 2019.
But, on March 16, those numbers began to drop off in a major way – only 953,699 were screened that day, compared to 2019’s 2.17million screenings that same day.
Throughout April – during the height of the quarantine phase and pandemic in the US – the TSA reported that the number of passengers screened frequently fell to 80,000 to 90,000 people. In 2019, they routinely screened more than 2million passengers.
Since travel restrictions have begun lifting and cities are reopening, people have begun taking more flights.
From June through August, between 500,000 to 800,000 travelers were screened by the TSA, however these numbers are still down by about 30 per cent from where they were in 2019, especially considering it was peak summer travel season.
Airlines are scrambling to appeal to the fraction of people who are still willing to travel during the pandemic, particularly as the $25billion government bailout funds they received to help stave off layoffs is ending.
United and other large American carriers have been trying to coax air travelers back to the airports with attractive offers and customer-friendly terms.
Earlier this week, Delta and American joined United in scrapping flight change fees for domestic travel in the US.
Both Delta and American said the elimination of the $200 change fee is effective immediately and will be permanent.
According to an announcement on Delta’s website, all tickets for travel within the US, including Puerto Rico and the US Virgin Islands, will be exempt from the onerous charge, with the exception of Basic Economy tickets.
Similarly, American said only Basic Economy tickets will still be subject to a change fee, but extended the policy for flights to Canada, Mexico and the Caribbean as well.
The two airlines followed rival United, which on Sunday became the first US legacy carrier to standard to eliminate economy and premium cabin flights, as well as standby fees for all same day departures.
Delta, United and American were already waiving change fees through the end of the year to give travelers more flexibility during unprecedented and uncertain times.
Prior to the coronavirus pandemic, the cancellation fees represented around two percent to three percent of their total revenues in 2019, though analysts said the overall financial impact going forward will be limited as focus remains on generating bookings.
Delta collected $830 million in ticket cancellation and change fees last year, American $819 million and United $625 million, according to the U.S. Department of Transportation.
In 2019, the Department of Transportation said that US airlines had made $2.8billion in ticket change and cancellation fees, according to ABC News, thanks to charging between $50 to $200 to make changes to domestic flight tickets.
United CEO Scott Kirby said in announcing the motion that getting rid of the $200 flight change fee was a ‘top request’ from customers.
Starting January 1, 2021, the airline said, passengers will also be able to fly standby on earlier or later flights on the day their original ticket was booked without having to pay a $75, one-way fee.
Those with United’s MileagePlus Premier member status will be able to get a confirmed seat on a different same-day flight, so long as there’s availability in the same fare-class cabin.
Additional changes have also been for award flight travel.
‘Change is inevitable these days – but it’s how we respond to it that matters most,’ Kirby said in a video that was released by the airline Sunday.
‘When we hear from customers about where we can improve, getting rid of this fee is often the top request. Following previous tough times, airlines made difficult decisions to survive, sometimes at the expense of customer service. United Airlines won’t be following that same playbook as we come out of this crisis. Instead, we’re taking a completely different approach – and looking at new ways to serve our customers better.’
United’s move falls in line with the no change fee policy that Southwest Airlines has long had and comes at a time when airlines are taking a massive hit as air travel has dropped significantly in the wake of the coronavirus pandemic.
Delta CEO Ed Bastian said in a statement that eliminating the fee has ‘built on the promise to ensure we’re offering industry-leading flexibility, space and care to our customers.’
Delta also extended its waiver on change fees, including for international flights and Basic Economy fares, through the end of the year and will extend its expiration on travel credits through December 2022 for tickets booked before mid-April.
The airline is also blocking middle seats through January 6 of next year as a COVID-19 protection measure.
Both Delta and United excluded basic economy tickets from their no change fee policies.
Although, American added enhancements to basic economy fares with more flexibility for upgrades, preferred and main cabin extra seats, priority boarding, and same-day flight changes.
‘By eliminating change fees, giving customers an opportunity to get where they want to go faster with free same-day standby on earlier flights and providing access to upgrades and seats for all fare types, we’re giving customers the freedom to make their own choices when traveling with American,’ Vasu Raja, American chief revenue officer, said in a statement.