United Airlines warns of job cuts without government aid

CHICAGO/WASHINGTON (Reuters) – United Airlines Holdings Inc (UAL.O) warned on Friday it will begin taking steps to reduce its payroll to match a 60% schedule reduction planned for April “if Congress does not act on sufficient government support by the end of March.”

A letter to employees signed by leaders of United and four of its unions said: “While many in Washington, D.C. now realize the gravity of this situation, time is running out.”

The letter was part of a last-minute push by airlines on Friday for a $50 billion government stimulus package to include cash, arguing tens of thousands of jobs will otherwise be lost.

A Republican proposal introduced in the U.S. Senate on Thursday would grant up to $50 billion in secured loans to help passenger airlines hit by the coronavirus crisis, but bars cash grants and could result in the government getting equity stakes.

Senate Majority Leader Mitch McConnell wants a deal signed by the end of the day, spurring intense discussions between airlines and congressional aides, people familiar with the matter said.

American Airlines Group Inc (AAL.O) also joined forces with its main union groups to send a letter to Washington leaders, pleading for help amid what they called an extraordinary erosion in demand for air travel.

“Together, we implore our country’s leadership to act quickly to ensure our livelihoods are protected and our country’s air system remains intact,” American said in the letter signed by Chief Executive Doug Parker and the leaders of seven work groups including pilots and flight attendants.

American has 130,000 employees and is 85% unionized.

American and other large airlines have already raised capital and taken steps to reduce costs to a bare minimum in an effort to preserve cash as bookings continue to decline, but they have warned of furloughs without government relief.

U.S. President Donald Trump has said he stands ready to support the industry, but the idea of a bailout has met with a backlash from some critics who argue the airlines should have saved more cash for a rainy day, rather than rewarding shareholders.

“Whatever they ask for will be very controversial,” said Al Koch, vice chairman of AlixPartners, who was involved in the restructuring of General Motors in 2008-09. “It’s one thing for Trump to say we’ll stand behind airlines, and another thing for Congress to enact something into law.”

Meanwhile, some union groups were lobbying hard for any stimulus package to guarantee protections for frontline employees.

Larry Willis, president of the AFL-CIO’s Transportation Trades Department, said a focus on workers was “one of the main things that was missing from Senator McConnell’s proposal.”

To protect workers, Association of Flight Attendants-CWA President Sara Nelson is pushing for direct payroll subsidies for employees, ranging from wheelchair assistants and gate agents to mechanics and flight attendants.

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