United Airlines expects to furlough 332 employees at Daniel K. Inouye International Airport and an additional 54 at Kahului Airport for six months or longer beginning around Oct. 1, as the effects of the COVID-19 pandemic continue to hammer the airline industry and stifle Hawaii’s tourism-based economy.
The planned furloughs in Hawaii are part of United’s expectation to furlough 36,000 employees, or an estimated 45% of its entire U.S. workforce.
The Associated Press reported the furloughs could include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers and 2,250 pilots.
In a Worker Adjustment and Retraining Notification Act — or WARN — letter dated Wednesday, United wrote to Hawaii’s Department of Labor and Industrial Relations that the COVID-19 epidemic has brought its business “to a near standstill” and the company has lost “billions of dollars” since April, or an estimated $40 million per day.
United said the Hawaii job losses might be lessened through “creative solutions with our union partners or if there is significant participation in voluntary programs to reduce payroll expense.”
Buyouts come at a price. United said it would take a $300 million charge in the second quarter to cover voluntary departures so far. The company said it was unable to estimate the cost of workforce reductions for the rest of the year.
In a similar notification letter sent to some United employees in Hawaii, the company wrote that “it’s increasingly likely that travel demand will not return to normal until there is a widely available treatment or vaccine.
“As a result, we have made the extremely difficult decision to communicate that we may need to furlough many of our colleagues.
“We understand the impact that this will have on affected employees and their families, and so we did not make this decision lightly. Once again, we are only pursuing this option as a last resort to ensure the airline’s path through this crisis.”
Sara Nelson, president of the Association of Flight Attendants, called United’s projected furloughs “a gut punch, but they are also the most honest assessment we’ve seen on the state of the industry. This crisis dwarfs all others in aviation history, and there’s no end in sight.”
The outlook for a recovery in the airline industry has dimmed in just the past two weeks, as infection rates rise in much of the U.S. and some states impose new quarantine requirements on travelers.
Hawaii’s mandatory 14-day self-quarantine for trans-Pacific passengers has been in effect since March 26, effectively reducing tourism to a trickle. Although visitors numbers have been slowly ticking upward in recent weeks, arrivals are nowhere near where they were in July 2019, when approximately 35,000 out-of-state passengers were coming to Hawaii daily.
The Hawaii Tourism Authority reported Wednesday that 721 visitors were among the 2,685 passengers who arrived in the islands Tuesday on a total of just 24 flights.
A prearrival testing program that goes into effect Aug. 1 is not likely to immediately jump-start airline travel to the state.
Airlines say they must shrink to match falling travel demand. American Airlines executives have said they could have 20,000 more employees than the airline will need this fall.
United cannot lay off workers sooner than Oct. 1 as a condition of the $5 billion it got as its share of $25 billion in federal aid to help airlines cover payroll costs for six months.
The flight attendants’ union and other airline labor groups are lobbying Congress for another $25 billion to protect jobs through next March. But a senior United executive expressed doubt that Congress would approve the spending in an election year.
United has already cut capital spending by $2.5 billion and convinced thousands of employees to take unpaid leave. It has hoarded cash after raising billions in new borrowing, including mortgaging its MileagePlus frequent-flyer program.
Executives said the notices covered 45% of the airline’s U.S. staff, most of whom are represented by unions. They would have reinstatement rights if United’s fortunes improve. An additional 1,300 management and support staff will be laid off Oct. 1, the company said. Including international employees, United has a work force of about 95,000.
Delta Air Lines recently told employees that it will send layoff notices to more than 2,500 of its 14,000 pilots, but it has not publicly discussed the outlook for other workers. American has not said whether it has issued layoff notices, but executives have encouraged workers to take buyouts. Southwest Airlines said Wednesday it has not issued layoff warnings.
Staff writer Dan Nakaso contributed to this report.