United Airlines Tells Employees To Expect Job Cuts

United Airlines sent out a press release this evening, a copy of a letter to employees under the signatures of outgoing CEO Oscar Munoz and soon-to-be CEO Scott Kirby in which they lay out how bad they expect the novel coronavirus to be for the business – and in the middle of the letter they reveal that it “no longer appears realistic” to “avoid [taking] steps that affect [employee] paycheck[s].”

The airline reports that this weekend they have been in discussion with its unions to reduce “payroll expense.”

The letter also outlines major capacity reductions, and that they expect few people to fly even with 50% fewer flights. However that’s more or less table stakes at this point. While reduced headcount in some form has been a safe bet it’s the first time we’ve heard it out loud from the major U.S. airlines

To our United family:

In the message we sent to you last Thursday, we promised to stay in close touch about the impact of the coronavirus on our business and the steps that we’re taking to aggressively manage it.

In just the last few days, the impact of the coronavirus has really hit home and disrupted the daily routines of hundreds of millions of people in the United States and around the world. State and local governments continue to close schools, encourage people to avoid bars and restaurants and cancel more large gatherings. This weekend, President Trump announced new travel restrictions for the United Kingdom and Ireland. Watching this unfold, you won’t be surprised to hear that the impact of the coronavirus on our business has also gotten quite a bit worse.

As the leaders of the 100,000 people of United, we feel a deep obligation to each of you to run our company in a way that protects you — and your ability to provide for your family at home. We also owe it to you, especially in a crisis, to be open with you about important decisions we face.

We want to share some numbers to help you understand just how bad the impact of the coronavirus has been on our business. As you know, March is typically our busiest month of the year. But this year, in just the first two weeks of March, we have welcomed more than one million fewer customers on board our aircraft than the same period last year. We’re also currently projecting that revenue in March will be $1.5 billion lower than last March.

The bad news is that it’s getting worse. We expect both the number of customers and revenue to decline sharply in the days and weeks ahead.

Since late January, we have taken steps to aggressively manage this crisis and to keep you informed every step of the way – sharply reducing schedules, imposing a hiring freeze, introducing a voluntary leave program, dramatically reducing discretionary spending, cutting CEO base salary 100% and deferring a salary increase. Our competitors have started to follow suit: on Friday, Delta announced a 40% schedule reduction and a 100% salary cut for their CEO and over the weekend, American said it will reduce its international capacity by 75%.

We took early, aggressive action because we have been determined to do everything possible to avoid painful steps that affect your paycheck. But, based on the severity of the situation, that no longer appears realistic.

This weekend, we began conversations with our union leadership about how to reduce our payroll expense in a way that minimizes what we know will be painful for all of us. Earlier this evening, we convened a call with Corporate Officers to update them on the severity of the situation and let them know we will be cutting their salary by 50%.

Let us be clear: these are not the only next steps. Tomorrow, we will announce an approximately 50% cut in capacity for April and May. We also now expect these deep cuts to extend into the summer travel period. Even with those cuts, we’re expecting load factors to drop into the 20-30% range — and that’s if things don’t get worse.

Together, we’re facing an unprecedented challenge. When medical experts say that our health and safety depends on people staying home and practicing social distancing, it’s nearly impossible to run a business whose shared purpose is “Connecting people. Uniting the world.”

We both hate to have to write a note like this, but we have made a commitment to be honest and transparent with you. While it’s now clear that this is going to painful for our people, we promise that you are at the very top of our priority list. We are working night and day on support and ideas to keep as much pay as we possibly can flowing to you — even if gets worse from here and demand temporarily plummets to zero.

This crisis is moving really quickly. It’s having an impact on nearly every aspect of our lives, and it may feel to you like everything is changing. But, the most important thing about our business hasn’t changed: you’ve shown us that even in these difficult times, we’re still United and focused on caring for our customers and each other together. That’s always been the essential ingredient to our success. It’s what will get us through this crisis in the near term, and it’s also what will allow us to fulfill United’s incredible potential in the long-term.

We’ll continue to communicate frequently and transparently in the days ahead.

With resolve,
Oscar and Scott

This is just the beginning, and not only for airlines. Restaurants are being ordered closed. Many will default, and employees there will lose their jobs. Who will be going into barber shops and beauty salons? The economy is slowing. Businesses aren’t out selling, deals aren’t getting done at trade shows, and just as importantly everyone is taking a ‘wait and see’ attitude on committing to just about any new investments across the board.

It’s not just about the airlines. We’re already in recession, though it will be some time before we officially know it. The question is how long it lasts, and how robustly the economy bounces back afterward.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] Many airline workers would be furloughed under this scenario. To use United’s ballpark, 60%. But the bailout then is costing about $13,000 per month per worker – with management and senior captains making $300k+/yr fully bailed out by taxpayers, where the median US income is $30k – and that only defers layoffs through September. United says it doesn’t prevent them. […]

Comments

  1. Rather than speculate, maybe you can highlight what happened in communist China or South Korea. What did their gov do to stabilize the situation.

    Will UA be ready then travel restrictions go away?

  2. “Tomorrow, we will announce an approximately 50% cut in capacity for April and May.”

    This is the announcement I have been waiting for. I have an award flight to Madrid booked for May, and I fully expect United to announce that it will not be flying to Madrid in April and May. Hopefully that will mean I can get my miles returned to my account for future travel when the coronavirus crisis has ended.

  3. Omg. Is everyone a sheep now. It’s the flu… period. More people will die in traffic accidents then this… seriously I hope everyone loses there jobs if this is how they will behave… f bs.

  4. As a United Airlines flight attendant, this has taken all of us in shock. Every single one of us is worried about tomorrow and what will happen to our jobs and our livelihood. Not one person I spoke to feels safe from this. None of us have been worried about getting sick, but that we will have jobs to come to next week.

  5. Rather than serve a public purpose and try to keep the airways open. It appears to me that United is reducing its flight footprint, trying to keep all of its planes full. I think that argues against federal government bailout and for a weakening of the conditions that allow it to be part of an Oligopoly.

  6. yes by all means worry about getting your miles returned when tens of thousands of airline employees are going to be losing out jobs . What a selfish bastard .

  7. They have been profitable for years now and one month brakes them all?

    Give me a fn break another national crisis they are using play the out of money card.l

  8. @Other even with these cuts they’re saying they expect a 25-30% load factor. Normal is over 80%. Basically the airlines are being starved to death. It’s only because they’ve been profitable for the last few years that they’ll even survive.

  9. As much as it may seem unfair, this may be the only way to ensure that the airline survives in a healthy manner.
    Of course, once the situation improves, the airlines should reach out to former employees like this as they ramp up operations and subsequently hiring. Lets see how it turns out

  10. Even today, after all the virus information, the idiots are still calling it THE FLU and ignoring all real science. If you are one of these people, please go hug everyone, touch everything, and buy life insurance so your kids get collect. We will not miss you one bit.

  11. @your daddy. It is not the flu. COVID-19 is 10 times as fatal as the flu. It is way more transmissive and there is no vaccine to prevent infection.

  12. dddhp, technically (i apologize for this by the way) shouldn’t it have been “more fatal”?

  13. and i also smell a BUNCH of potential lawsuits coming at United Airlines from the employees who do end up being laid off.)

  14. MPCompliance should be the first to go. They made it clear they don’t want my business. Bye Bye $30k of annual spend

  15. Unfortunately airlines don’t care much for their employees also Unions only care for their membership numbers. Yes” sad times for many of us who will be loosing our means of income. Unbelievable but true! I have not heard a word from our Union? Crickets I am aware the company makes all the decisions not the Union however the Unions should be involve vs doing nothing? Errrrrrr

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