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United Airlines Decides to Delay Pilot Furloughs Till Oct 30

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Per a Reuters report, United Airlines Holdings (UAL - Free Report) has decided to delay the effective date for pilot furloughs until Oct 30, 2020. In the meantime, union members will vote on a broader deal that would protect approximately 2,850 jobs for some months.

However, according to a memorandum of understanding between United Airlines and the union representing its 13,000 pilots, in case the deal is not approved, the pilots will not be paid in October.

Per United Airlines’ spokesman Frank Benenati, “Our pilots are voting right now on a tentative agreement that, if approved, would avoid all pilot furloughs for at least nine months.”

With the approaching expiration of the federal aid on Sep 30, 2020, U.S.  airlines have been warning of massive job cuts in October. United Airlines had earlier warned that it will have to furlough about 16,370 employees, including 2,850 pilots starting next month, given the persistent weakness in air-travel demand, thanks to coronavirus. Notably, U.S. airlines, including United Airlines, which have accepted financial assistance under the CARES Act to cover their payroll expenses, are prohibited from laying off employees until Sep 30.

To protect jobs for another six months, airlines have been seeking additional financial assistance. While there had been positive talks on this front previously, nothing has materialized yet even though the federal aid will soon expire.

As airlines seek clarity on whether additional financial help would come through, they are putting off furloughs for now. Apart from United Airlines, Delta Air Lines (DAL - Free Report) will delay its decision to furlough pilots until Nov 1.

Both United Airlines and Delta carry a Zacks Rank #4 (Sell).

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