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2020-05-05

United Airlines will cut management by 30 per cent in October, also preparing pilot changes: company memos

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United Airlines Holdings Inc (UAL.O) plans to reduce the demand for air travel by at least 3,400 management and administrative positions in October as the coronavirus pandemic crushes the demand for air travel and, according to two memos from Reuters, has also told pilots to stand up for change.

Chicago-based United is among the U.S. airlines that have accepted payroll aid from the U.S. government that bans job or pay cuts before Sept. 30. But United and other carriers have warned that by that date demand is unlikely to recover to pre-crisis levels, forcing them to shrink in the fall.

The United memos are the first indication of just how much major airlines could downsize because of the health crisis.

"We must acknowledge that if we do not continue to take strong and decisive action, which includes making decisions that none of us ever wanted or expected to take," said Kate Gebo, Executive Vice President, Human Resources and Labor Relations, in a memo to some 11,500 managers and administrative staff.

Affected staff will be notified by mid to late July for an effective date of Oct. 1, she said, while encouraging staff to consider voluntary separation before that date.

In a separate memo from Reuters, pilots were told to prepare for a "displacement" that will affect approximately 30 per cent of approximately 12,250 pilots.

One pilot union official said that as soon as Oct. 1, the group interpreted the message to mean a 30 per cent reduction.

United sent memos to a number of working groups on Monday about short-term changes and potential long-term implications, said spokeswoman Leslie Scott.

"For the foreseeable future, travel demand is essentially zero and, even with federal assistance covering a portion of our payroll expenses through Sept. 30, we anticipate spending billions of dollars more than we take in for the next few months, while continuing to employ 100 percent of our workforce," United Speaker Frank Benenati said in an email. "That is not sustainable for any enterprise."

United and other airlines, which had been mapping growth plans only months ago, have parked jets and drastically cut flight schedules in an effort to reduce costs and keep up cash until demand recovers.