United Airlines Warns 36,000 Workers Could Be Cut As Air Travel Declines

United Airlines (UAL) has warned about the potential lay off of 36,000 frontline employees — more than a third of its staff from the start of 2020 — as demand for air travel continues to decline amid the coronavirus pandemic.

The cuts come as United Airlines, along with several other major airlines, signed a letter of intent to receive another $25 billion in federal loans. The letter outlined the terms of the loan and will need to be decided upon by Sept. 30.

U.S.-based airlines received $25 billion in federal payroll aid previously as the travel industry was nearly decimated by the coronavirus and travel restrictions around the world. Under the loan, United is prohibited from laying off workers or cutting their pay until Oct. 1.

United is also required to give its employees a 60-day notice about possible layoffs or furloughs under federal law and has sent a memo obtained by CNBC to workers that said it will exhaust all voluntary measures before cutting jobs. United has asked employees to take voluntary layoffs, buyouts, and early retirement to help circumvent the number of jobs lost.

The memo also notified employees that some may be called back to work as air travel demand returns with furloughs are expected to affect unions workers with WARN notices thought to impact 15,00 flight attendants and 2,200 pilots, the news outlet said.

“The United Airlines projected furlough numbers are a gut punch, but they are also the most honest assessment we’ve seen on the state of the industry,” Sara Nelson, a flight attendant for United and president of the Association of Flight Attendants, told CNBC.

Shares of United were trading at $31.49 as of 1:14 p.m. ET, down $1.06 or 3.26%.