United Airlines (UAL) - Get Report reportedly switched some mandatory schedule reductions for its workers to voluntary, after one of its unions sued, claiming the airline was violating the terms of its government bailout.
On Friday, United informed its fleet and customer-service staff that full-time workers would have their hours cut to 30 a week and they would become part-time workers, CNBC reports.
The International Association of Machinists and Aerospace Workers on Tuesday responded by suing. That’s because airlines receiving bailout money are forbidden from lowering pay or laying off their workers through Sept. 30.
United is taking about $5 billion in federal payroll support. It has reduced its flights by 90% this month, as would-be passengers stay home in response to the coronavirus epidemic. That means millions of dollars of lost revenue per day.
The airline now wants full-time fleet and customer service staffers to voluntarily slash their hours from 40 a week to 30, and for part-timers to go from 20 to 10. Benefits wouldn’t change, a spokesman for the Chicago carrier told CNBC.
If a sufficient number don’t volunteer, mandatory cuts will ensue, the company warned in a note to workers, according to CNBC.
In a note from Chief Operating Officer Greg Hart, the company also encouraged workers to consider quitting, CNN reports. "You may want to seriously consider if you're in a position to take a voluntary separation," he said.
United told employees Tuesday that it plans to cut at least 3,400 management and administration positions in October, some 30% of that sector's headcount.
And it warned that a similar percentage of the carrier's 12,250 pilots could be laid off as well, as near-term travel demand remains “essentially zero.”
United shares recently traded at $22.62, down 6.2%. The stock has dropped 72% over the past three months, compared with a 14% slide for the S&P 500.