The labor union representing the interests of more than 25,000 United Airlines aircraft and passenger service workers sought an injunction on Tuesday, May 5th, against United’s announcement of schedule cuts, alleging the airline violated the terms of billions in federal coronavirus aid by cutting employee work schedules.
Eligible airlines last month began receiving portions of US$25 billion in grants and loans that were earmarked for the sector in the US$2.2 trillion CARES Act, the third government stimulus package designed in part to help industries hardest hit by the pandemic.
One of the conditions of accepting the federal aid from government is that the CARES Act prohibits layoffs or reducing principal pay rates of workers through Sept. 30, 2020, though executives at both major carriers, including United and Delta, admit they expect to become smaller airlines once things begin to get back to normal.
Last month, United said it reached an agreement with the Treasury Department of the United States for about US$5 billion in payroll support under the CARES Act.
As air travel demand dove more than 90% in the U.S., airlines have already raced to cut costs, which includes methods such as stock buy-outs, leasing aircraft, parking thousands of jetliners, slashing routes and urging thousands of employees to take unpaid or partially paid voluntary leaves of employment.
Several airlines, including United, Delta and JetBlue, have announced or already implemented reduced worker schedules with fewer flights, meaning employee paychecks are smaller.
United last Friday told its fleet and passenger service teams that they would be reduced to part-time status later this month to better match weak travel demand.
"Travel demand is essentially zero – you see that at our airports and on board our aircraft – and we don't know when it's going to come back," United's COO, Greg Hart, said last Friday in a staff note. "And importantly, even with a federal government grant that covers a portion of our payroll expense through September 30, we anticipate spending BILLIONS of dollars more than we take in for the next several months, while continuing to employ 100% of our workforce. That's not sustainable for any company and that's why we are making difficult decisions across our entire business."
The International Association of Machinists and Aerospace Workers, which represents the field of fleet service (aircraft maintenance technicians, aircraft cleaners and detailers, and passenger service workers), filed a lawsuit in federal court in New York to try to stop United from the schedule reductions, arguing that it violates both the CARES Act and their own job contracts.
"The lawsuit is meritless," United said in a statement. "Our decision is in full compliance with both the CARES Act and our Collective Bargaining Agreements and importantly, only came after repeated attempts to negotiate a consensual, more favorable agreement with IAM leadership. We continue to employ 100% of our workforce and continue to pay the contractually required pay rates."
The airline added that its "goal remains to preserve as much financial flexibility now so we can not only survive this crisis, but thrive once it is behind us."
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