United Airlines (NASDAQ:UAL) news for Thursday includes talk of possible layoffs at the travel company dropping UAL stock.
The revelation came in the form of a notice sent out to 36,000 employees, or roughly a third of UAL’s workforce. However, United Airlines notes that just because these warnings have been sent out, that doesn’t mean the employees will be laid off.
While the warning from United Airlines doesn’t mean layoffs are coming, it could be a sign that the airline is having trouble recovering from the novel coronavirus pandemic. If cases continue to rise and a second lockdown goes into effect, the layoffs are sure to take place.
It’s worth pointing out that United Airlines can’t lay off employees immediately. This warning has it giving them a 60-day notice, which is required by federal law. UAL also can’t lay off employees until the start of October due to it accepting bailout money from the government, reports CNBC.
Even with that government funding, the damage the pandemic has done to the airline industry is great. Executives at United Airline say that it’s losing $40 million a day. If it can’t cut costs, it’s only going to get worse.
One executive speaking to the Chicago Tribune confirmed as much. They said that layoffs are “the last option left to protect the long-term interests of the company.” If the warnings of layoffs are going out now, that’s not a good sign for UAL.
UAL stock was down 7.6% as of Thursday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.
