United, Delta Signal Longer-Term Job Cuts on Collapse in Travel
(Bloomberg) -- Two of the nation’s biggest airlines are warning workers that the unprecedented loss of customers may leave both as smaller companies in the future, imperiling U.S. airline jobs even after the government steps in with billions of dollars to help the industry weather the coronavirus pandemic.
Top executives at Delta Air Lines Inc. and United Airlines Holdings Inc. told their combined 187,000 employees Friday that they won’t impose furloughs or pay cuts before Sept. 30 to comply with a six-month worker-protection period mandated by a federal rescue package.
The House passed the $2 trillion aid bill and sent it to President Donald Trump, who signed it Friday. The package includes $50 billion for U.S. passenger airlines in both loans and grants, primarily aimed at protecting airline jobs. But that help only goes so far.
“The global economy has taken a big hit, and we don’t expect travel demand to snap back for some time,” United Chief Executive Officer Oscar Munoz and President Scott Kirby wrote to employees. While the airline hopes for a faster recovery, the executives said they wanted to be honest about what workers can expect: “If the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”
Travel demand probably won’t return to pre-pandemic levels anytime soon, given the huge impacts to the global economy and an enormous spike in U.S. unemployment claims. United said it’s tried to model possible financial outcomes for 2020 and 2021, but has little confidence in the conclusions because there’s no precedent for the steepness of the drop in demand.
Delta CEO Ed Bastian urged more employees to take voluntary leave as the Atlanta-based carrier parks roughly 600 planes and winds down most of its capacity in April and May. To date, 21,000 Delta employees have applied for the leave.
“I know that a temporary reduction in work hours as we shrink the operation is difficult,” Bastian said in a memo.
This week, United also began a program to entice some workers to retire early, by extending their health insurance and travel benefits. American Airlines Group Inc. said it has had more than 600 pilots who are 62 and older accept an early-retirement program that offers them half their current income until the normal pilot retirement age of 65.
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