United Airlines plans to eliminate more than 3,400 management and administrative positions Oct. 1 as the airline reels from the coronavirus pandemic that has brought air travel to an almost standstill.
Chicago, United’s hometown, could be especially hard-hit.
“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,” Kate Gebo, the airline’s executive vice president of human resources and labor relations, said in a memo to employees on Monday.
The cuts represent 30% of United’s roughly 11,500 management and administrative employees, most of whom work in Chicago, home to the company’s Willis Tower headquarters. Employees affected by the cuts, which go into effect Oct. 1, will be notified in July, Gebo said.
United expects to announce a voluntary separation package for domestic management and administrative employees in mid-May, Gebo said in the memo, a copy of which was obtained by the Tribune. Employees who take the offer will be able to keep travel privileges and medical benefits for an extended period, along with “some continuation of pay,” she said. Starting Oct. 1, the company will no longer offer management and administrative employees cash severance packages.
Gebo said United is “trying to give everyone as much notice as possible that changes are coming, and we’re making the voluntary options as attractive as possible.”
In the meantime, domestic management and administrative employees will be required to take 20 unpaid days off between May 16 and Sept. 30.
Employees across the airline have had their hours reduced or been asked to take voluntary unpaid leave as the airline, facing “essentially zero” demand for travel, works to slash costs.
Passenger numbers at U.S. airports are down roughly 95% from the same period last year, according to the Transportation Security Administration. United has slashed about 90% of its flying capacity in May and expects to operate a similar schedule in June.
Last week, the company said it would reduce 15,000 airport workers’ hours to part-time. More than 20,000 employees have already taken unpaid leave or separation options.
United CEO Oscar Munoz and president Scott Kirby won’t receive their base salary through at least June 30, and corporate officers’ base salaries have been cut by half.
United received $5 billion in federal financial assistance to keep workers on its payroll through Sept. 30. The funds were part of the $2.2 trillion coronavirus relief package.
Still, United said those funds won’t fully cover its payroll costs, and there are so few people flying the airline expects to spend billions more than it earns for the next several months.
That’s “not sustainable for any company,” United said in a statement. “And that’s why we are doing everything we can to reduce costs in the near-term so we can bounce back quickly when demand starts to return and help ensure our company and the jobs it supports will be here when customers are flying again."
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