- United Airlines CEO Scott Kirby said on Wednesday that the airline could avoid layoffs of front-line workers if they agreed to reduced work hours until the economic crisis brought on by the coronavirus ends.
- Kirby said in an appearance on CNBC that the airline was working with labor unions to try and reach an agreement.
- The airline has previously said it would need to be "smaller" on the other side of the downturn, and that "at least" 30% of management and administrative workers would be cut . It was not clear whether those workers would be included in a potential plan to avoid layoffs.
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United's CEO hints the airline could avoid layoffs if employees are willing to take huge cuts in their work hours instead (UAL)
Kamil Krzaczynski / Reuters
United CEO Scott Kirby said on Wednesday that the airline could avoid layoffs if employees are willing to take significant cuts to their work hours until travel demand resumes.
Kirby's comments, which aired on CNBC on the day he began his new role as CEO, were an unexpected reversal from an airline that has been warning since March of mass layoffs to come later this year.
Kirby was previously president at the airline. It was announced late last year that he would take over from former CEO Oscar Munoz this month.
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"We are hopeful at United that we can work with our unions to variablize our pay structure and frankly, not lay anyone off, not furlough any of our frontline employees," Kirby said. "Instead, using voluntary programs, and in particular, asking people to work fewer hours until we get through the crisis."
In joint communications to employees throughout the crisis, Kirby and Munoz warned that the airline expects to be "smaller" following the crisis and expects to reduce its workforce in October .
"But the challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as October 1," Munoz and Kirby wrote in an April 15 memo. "Throughout this crisis, we have been candid and upfront with you. And today is no different."
Earlier this month, the airline told its management and administrative, or "M&A" employees who are not represented by a labor union that it expects to reduce that work force by "at least" 30%.
It was not immediately clear whether a similar hours reduction would be offered to M&A teams. Last week, the airline announced buyout offers in an effort to drive voluntary departures from M&A ranks. The offered packages include five years of active employee flight benefits .
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M&A employees were also told that they would be required to take 20 unpaid days off between May 15 and September 30, effectively a 20% reduction in work hours for the period. United backed off a similar requirement for about 27,000 frontline employees after the union representing them sued the airline, instead asking for voluntary work reductions.
About half of United's flight attendants have taken voluntary unpaid leaves of absence during the crisis, Kirby said.
"That means in a world where demand is down 50%, we wouldn't need to furlough a single flight attendant. Because if half of them are gonna volunteer, then the other half can be there."
According to Kirby, reaching an arrangement with workers to avoid layoffs or furloughs would help the airline with it's long-term recovery.
"If we can keep them kind of on the sidelines a bit while we get through the crisis, but still engaged, still working, just not working as many hours, then when there is a recovery, we can snap back quickly," he said. "And if we furlough people or lay them off, we might get through the crisis, but the snap back will be very hard."
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Under the terms of $5 billion in payroll assistance United is receiving under the federal CARES Act bailout, the airline is prohibited from laying off or furloughing workers until after September 30.
The airline has said that funds do not fully cover its payroll or other operating expenses, and that it continues to lose tens of millions of dollars each day as travel demand remains near zero due to the pandemic.
Are you an employee at United or another airline? Contact this reporter with your thoughts or tips at dslotnick@businessinsider.com .
See Also:
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- American, Delta, Southwest, and United say more people are starting to book travel, but that good news may not last
- Delta plans to add extra flights to spread out passengers and keep planes no more than 60% full, a new report says
- A new social distancing-friendly airplane seat design would strap barriers to middle seats to divide the window and aisle passengers
SEE ALSO: Leaked memo shows United is trying to convince some workers to quit ahead of layoffs, and it's offering up to 5 years of free flights as an incentive
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