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United Airlines Workers File Class Action Alleging Company Violated Federal Aid Rules

United Airlines Holdings (NASDAQ: UAL) is facing a class-action lawsuit filed by non-union employees for violating federal aid rules, Reuters re

Benzinga · 05/14/2020 10:18

United Airlines Holdings (NASDAQ: UAL) is facing a class-action lawsuit filed by non-union employees for violating federal aid rules, Reuters reported Wednesday.

What Happened

The Chicago-based airline has qualified to receive nearly $5 billion federal aid to offset the impact of the COVID-19 pandemic. The aid's rules require the company to keep its payroll through September 30, at least.

The lawsuit alleges that two weeks after signing the federal aid agreement, the company informed that all domestic management and administration employees would be required to take 20 unpaid days off between May 16 and September 30.

According to the petitioners, forcing the employees to take time off breaches the agreement signed by United with the federal government.

"United employees face a substantial reduction in pay as a result of United's policies, despite the billions of federal dollars United received, specifically transferred to the company to protect employees," the lawsuit alleged.

The airline company denied the allegations in a statement to Reuters.

"This lawsuit is without merit, as we continue to employ 100% of our workforce," United said.

The company added it is looking to "preserve as much financial flexibility now so we can not only survive this crisis, but thrive once it is behind us."

The Boeing Company (NYSE: BA) CEO David Calhoun earlier this week told NBC News that at least one of the major U.S. airlines could go bankrupt due to the pandemic.

Price Action

United shares closed 9% lower at $20.71 on Wednesday. The shares traded slightly higher at $21.07 in the after-hours session.