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United Airlines Predicts Major Layoffs If Travel Doesn't Pick Up By Fall
The airline industry has been taking tremendous financial hits since February and United Airlines’ quarterly earnings conference call confirmed that the industry is still going through hardships.
According to United Airlines President Scott Kirby, the travel demand is basically “zero” and the airline is preparing for this to last until 2021.
“We aren’t projecting that, and certainly hope it’s better than that, but we are planning for the possibility,” says Kirby to USA TODAY.
If sales aren’t up by this fall, the airline will have no choice but to layoff employees this October. United Airlines has 93,000 employees with a good number of employees being in unions. Under the payroll protection terms of the CARES Act, the airline is not allowed to furlough its employees. According to USA TODAY, the airline has received a $3.5 billion grant and a $1.5 billion loan for payroll protection and is eligible to receive an additional $4.5 billion in general loans.
United Airlines has suffered a $1.7 billion loss for the first quarter of 2020 and the second quarter will be worse since it will be a full quarter during the COVID-19 pandemic.
Although it hasn’t been said how many employees will be laid off, Mike Leskinen, the Vice President of corporate development for United says their reality will be 30 – 40% of employees cut.
When it comes to signs of improvement, Kirby says the airline doesn’t see “significant signs of meaningful recovery” but searches for spring break 2021 are much higher than this time last year for spring break 2020.
“We see some evidence of pent-up demand. We don’t expect many of those to turn into real bookings or travel until the virus is sufficiently contained and the rhythms of daily life become routine again,” says Kirby.
United has been promoting social distancing, proper cleaning, and safety measures to help travelers feel comfortable flying again.
This week, United has started to require passengers to wear masks when flying an will even provide masks passengers.