- United Airlines will issue layoff and furlough notices to 36,000 employees, the company confirmed on Wednesday. That includes 15,000 flight attendants and 2,250 pilots.
- The airline had seen travel demand slowly climb through May and June, but new coronavirus outbreaks and quarantine orders have caused it to collapse again.
- The airline expects to fly just 40% of its capacity in August, but does not expect to fly more than that through at least 2020.
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United Airlines will warn 36,000 employees of potential furloughs and layoffs, the airline said on Wednesday, representing nearly 38% of the company's workforce of 95,000.
Travel demand had begun to recover in the months since April, when the peak of coronavirus lockdowns drove demand down as much as 97%, but the airline said demand fell again in recent weeks as the virus spikes across several states.
Impacted employees will receive Worker Adjustment and Retraining Notification Act notices, or WARN notices, this week, with a final notice about their status coming in early August. American Airlines began informing some employees of furloughs in late June .
Affected employees include 15,000 flight attendants, 2,250 pilots, 11,000 customer service and gate agents, 800 catering workers, 1,000 contact center employees, 225 network operations workers, 5,500 maintenance workers, and 1,400 management and administrative employees.
Airlines like United have tried to limit involuntary layoffs by reducing head count through voluntary measures like buyouts, voluntary leave, and early retirements.
While airlines are prohibited from furloughing or laying off workers until October 1 under the terms of the payroll support they received from the CARES Act, most employers are required to give 60 days of notice, where possible, under the WARN Act.
The airline said that not every worker who receives a WARN notice will ultimately be impacted. The final number depends on how many more employees take voluntary leave and buyout packages, as well as whether demand makes any unexpected recovery by next month.
Workers who are ultimately furloughed could end up being recalled once travel demand improves. However, the airline has said that it does not expect a full recovery until there is an effective vaccine or treatment for the novel coronavirus.
United said that new bookings began to slide almost as soon as New York, New Jersey, and Connecticut said that they would require people coming from states with COVID-19 spikes to quarantine for 14 days. Specifically, reservations for near-term travel within the next 30 days began to plummet after steadily rebounding for months.
In a media briefing on Tuesday, a senior executive for the airline said that the drop in travel demand coincided with quarantine orders imposed by some states as coronavirus cases have spiked in other states.
The fall was most severe at the airline's New York City area hub in Newark, New Jersey, where near-term net bookings were just 16% of the previous year's levels down from about a third shortly before the tri-state quarantine order was announced.
The airline expects to see a similar drop in demand at its Chicago, Illinois hub following a quarantine order implemented in the city this week.
In a filing with the Securities and Exchanges Commission on Tuesday, United said that it expected demand to recover slowly and inconsistently throughout the remainder of the pandemic.
United "does not expect the recovery from COVID-19 to follow a linear path, as illustrated by recent booking and demand trends," the airline wrote in a filing with the SEC on Tuesday. "[C]onsolidated capacity through the end of 2020 is expected to be generally consistent with August 2020," the filing continued, indicating that the airline does not expect a material improvement in demand until at least 2021.
"COVID-19 is an unprecedented threat to aviation workers and the entire US aviation industry," Sara Nelson, president of the Association of Flight Attendants, said in a statement. "This crisis dwarfs all others in aviation history and there's no end in sight. Demand was just barely climbing back to 20 percent of last year and even those minimal gains evaporated over the last week due to surging COVID-19 cases across the country."
In the SEC filing, United said it expects capacity to fall 65% in August compared to 2019. The airline estimated last week that the drop would be 60% , but United said it made adjustments to that announced schedule "resulting from reduced demand to destinations experiencing increases in COVID-19 cases and/or new quarantine requirements or other restrictions on travel."
As air-travel demand has slowly picked up from lows reached in April, airlines have said most of the demand is coming from leisure and "VFR" travelers those visiting friends and relatives as states lift lockdowns and Americans seek to shake off the cabin fever built up after months in quarantine.
Corporate travel, which yields higher margins for airlines than leisure, has not begun to meaningfully return.
Although the airline was somewhat optimistic that corporate travel could begin to return, with some companies lifting business travel restrictions, the new outbreaks and associated quarantines have effectively negated those hopes, the senior executive said.
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