United Airlines Holdings Inc. (NASDAQ:UAL) is considering furloughing 50% of its US workforce as the industry continues to feel the effects of the COVID-19 pandemic. The carrier has warned that travel demand will be curtailed by the resurgence of COVID-19 cases and the new restrictions that some states have imposed.
Travel demand curtailed by a resurgence of COVID-19 cases
The airline indicated that in June, its consolidated capacity dropped 88% YoY, and the July capacity will likely drop 75% YoY. Ahead of the peak summer travel season, the management anticipates August’s capacity to be down 65% YoY. As a result, the company has indicated that it will scale back scheduled plans announced at the beginning of the month. This is because of travel restrictions or new quarantine requirements in some states and a decline in demand to destinations witnessing a surge of new cases.
United indicated that it will add up to 25,000 international and domestic flights at the start of this month. In the wake of a resurgence of COVID-19 cases, the airline says that it will be evaluating and canceling flights on a 60-day rolling basis until there is recovery in travel bookings. The carrier’s management does not expect COVID-19 recovery to fall on a linear path, as shown by recent trends in demand and bookings.
United Airlines to furlough 36,000 staff
Due to drop in travel demand, the company considers furloughing around 36,000 of its employees as from August. This comes at the back of American Airlines Group Inc. (NASDAQ:AAL), indicating that it has 20,000 more staff than required to handle declining travel demand. The airline industry is hit hard, and executives state that the demand slump will take years to recover.
Despite receiving billions of dollars from federal government aid, the industry is preparing for massive job cuts. United indicated that the government money it received will run out by October 1, and they expect to know the number of furlough by mid-August.