January 13, 2015

United Airlines seeks to trim staffing levels by outsourcing 2,000 more jobs

After its merger with Continental Airlines, United Airlines set about a course of cost cutting exercises to reduce debt. Early in 2014 it closed its hub in Cleveland, while in July 2014 it announced its intentions to outsource 630 union jobs at 12 airports. The carrier, which has more than 85,000 workers, reported a wider first-quarter loss in April as revenue fell and costs increased, resulting in this course of action. Today United has announced a second round of job cuts, this time aiming to outsource up to 2,000 jobs at airports across the States.
This intended outsourcing indicates another step the carrier intends to take in order to meet the goal laid out in 2013 to cut its costs by US$2bn per annum. United made it very clear in an investor update last Friday that it anticipates 2014 unit costs to increase by up to 1.4% year-over-year, not including fuel and other special charges. Remaining competitive is crucial for United’s survival in such a competitive market. One of its major problems is that unlike its competitor, Delta Airlines, the majority of United’s employees are represented by unions. In particular, any member of the airline employed before April 2006 cannot be furloughed, and this applies to many of those 2,000 personnel earmarked. As a consequence they have to be offered jobs elsewhere in the airline.
In a bulletin posted on their website at the weekend, Rich Delaney, a union official, made it clear that the International Association of Machinists and Aerospace Workers, which represents those likely to be affected by this new review, found out a few months ago that United had requested contractors submit proposals to perform ground handling work at several stations. Talks between United and the unions are expected to commence on January 13th.



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