United Airlines Holdings (NASDAQ:UAL) UAL is planning to call back its furloughed employees as a second round of coronavirus relief aid for airlines reaches the final stages of being signed into law.
The Congress passed a $900 billion coronavirus aid package on Monday, of which airlines are set to receive $15 billion as payroll support. The bill is expected to be signed into law by President Donald Trump in a few days.
In a message to employees, dated Dec 22, United Airlines’ chief executive officer J. Scott Kirby (NYSE:KEX) and president Brett Hart stated that they will call back their furloughed workers temporarily and keep them employed through March 2021, as per terms of the new relief bill.
Management, however, warned that they do not expect much change in passenger demand “between now and the end of the first quarter of 2021”. The company does not expect a “huge difference in bookings over the next few months” and hence will be calling employees on a temporary basis.
Airlines, ravaged by the coronavirus-led downturn in air-travel demand, received $25 billion in payroll support under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. As a pre-condition to receiving the financial assistance, U.S. airlines were prohibited from laying off employees through Sep 30, 2020. With travel demand at an unprecedented low level, United Airlines and American Airlines (NASDAQ:AAL) AAL furloughed approximately 32,000 employees once the federal aid expired on Sep 30. However, they had plans of calling back employees in case a second round of stimulus came through. Similar to United Airlines, American Airlines is also expected to put its furloughed workers back into employment.
Both United Airlines and American Airlines carry a Zacks Rank #3 (Hold).
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Some better-ranked stocks in the broader Transportation sector are Landstar System (NASDAQ:LSTR), Inc. LSTR and United Parcel Service (NYSE:UPS), Inc. UPS, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Landstar and UPS have gained more than 21% and 56% in the last six months, respectively.
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