United Airlines warns aid isn’t enough to avoid workforce cuts

United Airlines planes at Newark Liberty International Airport

Leslie Josephs | CNBC

United Airlines warned that it expects a lengthy slump in travel demand because of coronavirus, which will likely require the carrier to have a smaller workforce.

The comments came after President Donald Trump signed sweeping $2 trillion government aid package that included billions in grants for airlines to keep paying workers through the end of September.

“Based on how doctors expect the virus to spread and how economists expect the global economy to react, we expect demand to remain suppressed for months after that, possibly into next year,” CEO Oscar Munoz and United’s president, Scott Kirby, who’s scheduled to take the helm next month, wrote in a message to employees. “That means being honest, fair and upfront with you: 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.”

The message was the latest in a series from executives who do not expect a quick U.S., or global, recovery from the coronavirus pandemic. The United States has detected more than 97,000 cases of COVID-19.

Layoffs or furloughs at United, which had about 96,000 employees as of the end of last year, aren’t imminent.

The coronavirus aid bill provides $25 billion in grants to U.S. passenger airlines, granted they do not furlough or cut the pay of their workers through Sept. 30. United executives committed to that on Friday.

The toll from the disease and draconian measures such as stay-at-home orders to stop it from spreading are already reverberating throughout the U.S. economy. Unemployment claims surged to a record 3.28 million in the week ended March 21.

U.S. airlines, which employ some 750,000 people, have been among the businesses hardest hit by coronavirus. Strict travel restrictions and concerns about contracting the disease while traveling have driven down demand. A fragile economy will also mean fewer lucrative business trips and vacations for consumers.

United and its competitors have slashed flights, parked hundreds of jets and asked thousands of employees to take unpaid leave. Executives have warned that even their reduced schedules are drawing few travelers. The Chicago-based airline has cut its April schedule by more than 60% and expects planes to fly less than 20% full or in the single digits in some cases, the executives said.

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