When United Airlines Holdings (UAL -1.30%) accepted $5 billion of federal aid through the CARES Act, it committed to not have any involuntary furloughs or salary rate cuts for U.S. employees through Sept. 30, 2020. The company is now making plans for employee level reductions after the deadline passes in October, according to a Reuters report.
As air travel has virtually ground to a halt during the COVID-19 pandemic, airlines are struggling to preserve cash, cut costs, and maintain financial flexibility. United has sent separate memos to management and administrative employees and its approximately 12,250 pilots, indicating a possible 30% cut in each of those areas, according to the report.
In a company memo to 11,500 managers and administrative employees, Kate Gebo, Executive Vice President Human Resources and Labor Relations reportedly said, "we have to acknowledge that there will be serious consequences to our company if we don't continue to take strong and decisive action, which includes making decisions that none of us ever wanted or expected to make."
A second memo that Reuters obtained discussed a "displacement" for 30% of United's pilots, which is being interpreted to mean job cuts as soon as Oct. 1, according to a pilot union official.
The report quoted United spokesman Frank Benenati as saying "travel demand is essentially zero for the foreseeable future and, even with federal assistance that covers a portion of our payroll expense through Sept. 30, we anticipate spending billions of dollars more than we take in for the next several months...that's not sustainable for any company."