United Airlines Holdings (UAL -2.52%) in June has work for only about 3,000 of its 25,000 flight attendants in June, according to reports, highlighting how deep cuts to the airline's schedule have been and just how unsustainable current airline business practices are.
Airlines have been hit hard by the COVID-19 pandemic, which has caused travel demand to evaporate. The industry, United included, has responded by cutting flights and grounding planes, but, as a condition of the $50 billion government bailout package, airlines are prohibited from furloughing or laying off workers. That means a lot of workers with not much to do.
Image source: United Airlines.
The airlines are required to keep payrolls intact until Sept. 30, and United has been blunt in telling workers it expects to make extensive cuts once those restrictions expire. United has also been accused of violating the terms of the government mandate, with an airport worker filing suit claiming United is unlawfully requiring nonunion and admin workers to take 20 unpaid days off this summer.
The airlines have ample liquidity to make it into the summer without traffic rebounding but will need revenues to trend upward by late summer and into the Fall to avoid facing serious liquidity issues. According to the report, United intends to continue flying about 10% of its normal schedule until demand recovers.
Other carriers have shown signs that are a bit more optimistic of late. JetBlue Airways chief operating officer Joanna Geraghty said earlier this month "we believe that we reached the bottom in terms of demand" in mid-April. Further, on Thursday, Delta Air Lines said it was bringing back two transatlantic flights, though cargo demand, and not passengers, played a big part in that decision.
