United's employee exits could cost USD 300m

FlyerTalk has reported United Airlines announced plans to lay off employees and continue to stay afloat during the COVID-19 pandemic, the news source said.

In a regulatory filing, the carrier says layoffs could go through the end of the year, while separation costs for the second quarter of 2020 are estimated around USD 300 million.

United Airlines could spend around USD 300 million in payoffs to employees willingly leaving the airline, while more are expected to be laid off starting in October 2020.

The airline says layoff notices were given as part of a strategic realignment of its business and new organizational structure as a result of the impacts of the COVID-19 pandemic.

As an attempt to reduce the number of job reductions, United has reportedly offered incentives to employees accepting voluntary buyouts. In total, giving departed employees flight benefits, continued health insurance and health care credits could cost the airline around USD 300 million. Of that, USD 50 million is expected in cash costs.

Even with voluntary exits, the airline anticipates they will have to furlough employees starting on Oct. 1, 2020 — the first date allowable by the CARES Act. The furloughs are expected to continue throughout the end of the year. The airline has not disclosed how many workers could potentially be displaced.