United’s new CEO eyes union cooperation to avoid staff cuts in pandemic

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United Airlines president Scott Kirby poses in front of the “Flight for the Planet”, the most eco-friendly commercial flight in history of aviation, according to the airline, before its departure from O’Hare International Airport to Los Angeles, in Chicago, Illinois, U.S., June 5, 2019.

Kamil Krzaczynski | Reuters

United Airlines’ new CEO, Scott Kirby, said Wednesday that the airline could work with labor unions to avoid furloughs this fall despite low demand because of the coronavirus pandemic.

Airlines are prohibited from laying off or cutting the pay rates of their employees through Sept. 30 under the terms of a $25 billion federal coronavirus payroll support program. 

Kirby told CNBC’s “Squawk Box” that he’s hopeful the company can work with the unions to adjust pay without temporarily or permanently axing jobs, “and instead using voluntary programs and, in particular, asking people to work fewer hours until we get through the crisis.”

Carriers, including United, this week reported a slight uptick in demand but air travel is still down more than 90% from a year ago, as the virus and measures to stop it like shelter-in-place orders keep potential vacationers and business travelers at home. Airlines are doubly challenged by the pandemic and a surge in U.S. unemployment with job cuts across the country expected to continue.

“By the time we get to Oct. 1, hopefully we will have continued to see a recovery in demand but none of us think it’s going to be back to 100% and that is going to lead to some hard decisions,” Kirby said.

He added that an increase in demand will likely be gradual and that “the full recovery probably doesn’t happen until we get to a vaccine.” 

Airlines have scrambled to calm travelers’ concerns about the health risks of flying during the pandemic. They have stepped up cleaning procedures and have said they will limit capacity on some aircraft.

Kirby, who took the reins Wednesday, said the airline is considering voluntary measures such as working fewer hours or changes in pay structure with unions to avoid cutting the jobs of front-line workers like flight attendants outright.

“If we can keep them kind of on the sidelines a little bit while we get through the crisis then when there is a recovery, and there will be a recovery … we can snap back quickly,” Kirby said. “If we furlough people, if we lay them off, the snap back is going to be really, really hard.”

More than 80% of United’s roughly 96,000 employees belonged to a labor union as of the end of last year, according to a company filing.

“Our union will make sure management remembers there are real people behind the numbers,” Ken Diaz, president of the United chapter of the Association of Flight Attendants, which represents the airline’s some 25,000 cabin crew members, its largest labor group. “We look forward to working with Scott to get results that matter to the people of United Airlines and those who fly with us.”

The union wants to work with the airline on voluntary programs, but “we’re not going to comment specifically on any hypothetical ideas Scott mentioned in the interview because we don’t negotiate in the press,” said AFA spokeswoman Taylor Garland.

United’s shares were up more than 4% in afternoon trading Wednesday along with other airlines that were trading higher.

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