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United Airlines to Trim Pilot Jobs in Absence of More Stimulus

Zacks Equity Research
·2 mins read

Joining its peers American Airlines AAL and Delta Air Lines DAL, United Airlines UAL warned of job cuts post Sep 30, 2020 when the current federal stimulus package expires. Notably, airlines have been grappling with the problem of overstaffing due to the coronavirus-induced depressed revenues, prompting them to contemplate redundancy.

While ringing the lay-off alarm bell, this presently Zacks Rank #3 (Hold) Chicago-based carrier  reportedly cautioned against furloughing 2,850 pilots in the Oct 1-Nov 30, 2020 time frame in absence of additional federal relief following the expiry of the existing payroll package.

Notably, in April, the Trump administration had provided the current financial aid in low-interest loans and grants under the Coronavirus Aid, Relief and Economic Security (CARES) Act. However, the financial assistance, which offered a much-needed relief to the aviation industry, came with certain conditions attached. For instance, the airlines which received the aid were required to maintain a minimum level of service and not dismiss any employee through Sep 30.

However, air-travel demand continues to be tepid as the expiry of the existing financial sop is round the corner. Per United Airlines management, the current demand-scenario "continues to be fluid with the resurgence of COVID-19 in regions across the U.S."

With air-travel demand still remaining subdued, the affected carriers already pleaded for an extension of the incentive, which if sanctioned, will protect the airline jobs through Mar 31, 2021. However, the request for more bailout funds (to the tune of $25 billion) from the Congress and its consequent six-month extension are yet to be approved, forcing airlines to issue warnings of job losses.

According to American Airlines’ latest statement, the carrier will have to furlough approximately 19,000 of its employees in October. Similarly, Delta plans to let go 1,941 pilots in October. Meanwhile, Spirit Airlines SAVE reportedly inked a deal with its pilots’ union to avoid the involuntary retrenchment of roughly 600 of its pilots in October.

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