United Announces Huge Layoffs, Union Gives Nasty Response


United Continental Holdings (NYSE:UAL) announced that it will involuntarily furlough 685 flight attendants as a part of a $2 billion plan to cut costs, according to a report from Reuters.

United said it couldn’t find enough attendants interested in either voluntary furloughs or a job share partnership program, forcing it to resort to involuntary layoffs of some members of the Association of Flight Attendants’ union, according to a press release seen by the news service. The union isn’t happy about the furloughs and fired off a nasty response, saying that United has failed to follow through with the promises it made during its merger with Continental.

“At the very basic level, today’s announcement is a failure by management to recognize protections of our contract.  Despite our recommendations to pursue options that would mitigate the company’s staffing overage, management declined to do the right thing and make the right choice for our airline’s success,” said Greg Davidowitch, president of the United Master Executive Council, per Reuters.

“Successful airlines do not lay off workers, they work with the union for solutions. We continue to meet with management and offer creative solutions to an involuntary furlough; while also addressing the company’s needs to mitigate an overage in manpower,” he continued.

United announced its cost-cutting effort in November, after reporting disappointing third-quarter results. In addition to laying off flight attendants, United is also boosting fees for baggage, food, and business-class seats to increase what’s known as ancillary revenue. United has raised its plans for ancillary revenue by $700 million, hoping to net $3.5 billion in such fees by 2017.

In addition to United’s recent disappointing performance, the airline will also soon face competition from the new American Airlines Group (NASDAQ:AAL), which was created through the merger between AMR Corp.’s (AAMRQ.PK) American Airlines and US Airways (NYSE:LCC), and which has stolen the title of world’s largest airline from United.

“We are very positive on these stated goals, but where UAL has run into problems over the past two years is in execution of its stated plans,” S&P Capital IQ analyst Jim Corridore wrote in a client note seen by Bloomberg Businessweek after United announced its plans. Now it appears as though United is moving forward with its proposed initiatives, even though it’s ruffling some feathers in the process.

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