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United Airlines Offers New Separation Package for Older Employees to Cut Costs

United Airlines Offers New Separation Package for Older Employees to Cut Costs

United Airlines is offering a new company-wide separation program for longer-serving employees in a bid to further cut costs because staffing levels remain too high for the forecast travel demand over the next 12-months. New restrictions and a tougher approach to travel from the Biden administration has dampened hope that airlines might see any form of recovery within the first quarter of 2021.

United has cut thousands of jobs throughout the pandemic through a combination of early out’s and voluntary leaves of absence. Around 13,000 workers were also furloughed in October when a federal payroll support program ended.

Scott Kirby, the airline’s “number crunching” chief executive, had warned staffers who were brought back from furlough when Congress passed an extension to Coronavirus support measures that they will likely be re-furloughed at the end of March when the current package is due to expire.

Airline unions are currently lobbying Congress and the Biden administration for a further and longer-term extension to payroll support while a mass vaccination program ramps up. International travel is expected to be heavily curtailed until most of the U.S. population is inoculated, and a level of ‘herd immunity’ is achieved. It remains unclear when the vaccination program might achieve this aim.

United’s new Voluntary Separation Leave (VSL) Program is open to employees aged over 45 and with more than 15 years service with the airline. Although the program is not being described as an early out, employees who take up the offer will no longer work for United.

The program will be open to employees across the United States, as well as Guam and workers based at London Heathrow Airport. United has already shut down other international bases in Frankfurt, Tokyo and Hong Kong.

Two options are available to staff with either a maximum $20,000 payout but with generous tax-free funds made available for healthcare coverage, or a much larger lump sum but with limited healthcare benefits. Both plans will offer ex-employees active travel privileges through to the end of 2026.

On Tuesday, Southwest Airlines also announced plans to offer employees another round of voluntary leave. In an internal memo, the airline admitted that it “remains overstaffed in many areas”.

Around 17,000 Southwest employees either took a voluntary leave or left the airline altogether in 2020. The high uptake in voluntary measures is credited with helping Southwest to avoid any involuntary furloughs. Southwest remain confident that it can avoid furloughs through to the end of 2021 at the earliest.

Bloomberg reported that the new voluntary leave offer has not been extended to flight attendants after more than 30 per cent opted for an extended leave of absence in previous rounds.

View Comment (1)
  • How about the people that left the company within the last 3 years. Have email that then Oscar had said that if company offers buyout you get also.

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