US airlines send another 10,500 furlough notices as industry faces dramatic contraction

Aug 3, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Alaska Airlines, Allegiant Air, Frontier Airlines, Hawaiian Airlines and Spirit Airlines have warned more than 10,500 staff of possible furloughs this fall as the airline industry prepares to be significantly smaller as a result of the coronavirus pandemic for the next few years.

Combined, the notices represent more than a fifth of the carriers’ workforces at the end of 2019. Frontier and Hawaiian both notified nearly 30% of their respective employees of potential furloughs come Oct. 1 after protections under the federal governments coronavirus aid package, or CARES Act, expire.

The notices are required under the federal Worker Adjustment and Retraining Notification Act, or WARN Act, and were expected. This was especially true after the travel recovery stalled at the end of June. Companies typically warn more staff than are actually let go.

Sign up for the free daily TPG newsletter for more airline news!

“We’re in the midst of the biggest demand contraction in the history of our industry,” Alaska president Ben Minicucci said on July 23. That sentiment is shared by executives across the industry as airlines scramble to cull fall schedules — and workforces — in light of a slower-than-expected recovery in air travel due to COVID-19.

Every airline is working to get their cash burn — or the amount of money they lose on a daily basis — to around zero by the end of the year. Many say this is achievable but only if they reduce their expenses of which labor is the single largest line item with fuel prices down significantly.

Data from trade group Airlines for America (A4A) shows net booked passengers — or new reservations minus cancellations — down roughly 78% compared to last year during the week ending July 28. This is a slight improvement from the down 80% level it stood at for much of July but still far below 2019 levels.

Related: Alaska Airlines sees coronavirus as an opportunity to ‘rerack’ its route map

Travelers are unlikely to see much impact from the notices. The furloughs are aimed primarily at reducing airlines’ labor costs in light of the expectation that revenues will be down as much as 50% by the end of the year.

However, flyers will see some changes. American plans to reduce the number of flight attendants on its wide-body and premium Airbus A321T aircraft as a result from Oct. 1. In addition, airlines are introducing more touch-less technologies at airports in the aim to reduce the spread of the coronavirus but also potentially allowing them to slim the ranks of their front line staff.

Related: American will reduce staffing on flights to cut costs

Alaska, Allegiant, Frontier, Hawaiian and Spirit join American, Delta Air Lines and United Airlines in warning staff of impending furloughs. All together, the carriers have notified more than 75,000 employees that they may be let go this fall. This does not include potential furloughs at their regional affiliates.

JetBlue Airways has not sent WARN notices, spokesperson Tamara Young told TPG. Southwest Airlines has said it will not furlough any staff through at least the end of the year.

In addition, tens-of-thousands of airline staff have already taken either leaves of absence or early departure packages.

Related: Spirit Airlines calls June rebound an ‘outlier,’ could furlough nearly a third of staff

One way airlines could avoid furloughs is if Congress extends the CARES Act employment protections. Labor unions, including the Air Line Pilots Association (ALPA) and Association of Flight Attendants-CWA (AFA), are leading an effort to extend the protections through March 2021. American, Southwest and United back the push.

Barring an extension of the protections, Cowen analyst Helane Becker has warned of a “terrible Thursday” on Oct. 1 when many airlines have said they will prune their ranks.

Many airline executives forecast a roughly three-year recovery from the pandemic. They define “recovery” as returning to 2019 travel numbers.

Related: United is latest to back union-led effort to extend coronavirus employment protections

Below are the details of each airlines WARN notifications as of Aug. 1.

Alaska

WARN notices sent to roughly 4,200 frontline staff, according to spokesperson Bobbie Egan. More notices could be sent depending on the number of staff that take early departure or other voluntary packages.

Seattle-based Alaska employed 24,134 people at the end of 2019.

Allegiant

WARN notices sent to 275 pilots, said CEO Maurice Gallagher on July 29. The airline is also eliminating 220 positions, including letting go of 87 administrative staff, on Oct. 1.

Las Vegas-based Allegiant employed 4,363 people, including 947 pilots, at the end of 2019.

American

WARN notices sent to 24,285 pilots, flight attendants, maintenance and related, fleet service, passenger service, reservations, dispatch, training instructors and simulator engineers.

Fort Worth, Texas-based American employed 133,700 people at the end of 2019.

Delta

WARN notices sent to 2,558 pilots.

Atlanta-based Delta employed 91,000 people at the end of 2019.

Frontier

WARN notices sent to 1,484 staff, including 925 flight attendants and 559 pilots, according to spokesperson Jennifer de la Cruz. The numbers represent roughly 35% of the airline’s flight attendant and pilot work groups.

Denver-based Frontier employed 4,965 people at the end of 2019, according to U.S. Bureau of Transportation Statistics data.

Hawaiian

WARN notices sent to 2,135 pilots, flight attendants, maintenance, dispatch and airport operations teams, according to spokesperson Ann Botticelli.

Honolulu-based Hawaiian employed 7,347 people at the end of 2019.

Spirit

WARN notices sent to roughly 2,500 pilots, flight attendants, dispatchers, guest service agents and ramp agents, according to spokesperson Erik Hofmeyer.

South Florida-based Spirit employed 8,938 people at the end of 2019.

United

WARN notices sent to nearly 36,000 pilots, flight attendants, customer service and gate agents, maintenance, call center, catering and network operations staff earlier in July. Another 1,650 pilots were notified at the end of July.

Chicago-based United employed roughly 96,000 people at the end of 2019.

Related: Global air travel unlikely to recover until 2024 as COVID remains ‘issue’ in US, elsewhere

Featured image by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,600

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
  • 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.