United Airlines plans to eliminate thousands of management and administrative positions in October as the travel industry continues to be hit hard by the coronavirus pandemic.
The Chicago-based airline will eliminate at least 30% of its management and administrative positions by Oct. 1, "with some work groups impacted more significantly than others," United’s executive vice president of human resources and labor relations Kate Gebo said in a memo to employees on Monday. Impacted employees will be notified in mid-to-late July, she said.
That cut will amount to more than 3,400 of the company's roughly 11,500 management and administrative staff.
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"Governmental restrictions on travel, stay-at-home orders, and the lack of a medical solution for COVID-19 have brought bookings and demand for travel basically to zero," Gebo said. "This is forcing us to come to terms with the fact that our airline – and our entire workforce – will have to be smaller than it is today, and it’s requiring us to continue taking decisive actions."
"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," she continued.
Gebo encouraged employees to consider taking a voluntary separation package, the details of which were still being finalized and were slated to be announced in mid-May. That package would allow employees who leave to keep some continuation of pay, as well as medical benefits for a period of time and travel privileges. Beginning Oct. 1, the company will not offer a cash severance package to departing employees, Gebo's memo continued.
United will also be requiring all domestic management and administrative employees to take 20 unpaid days off between May 16 and Sept. 30, the memo reads.
United reported on Thursday a $1.7 billion loss in the first quarter of 2020, as the coronavirus pandemic has brought air travel to a near standstill worldwide.
"Throughout the COVID-19 crisis we have maintained our focus - first on the safety of our customers and our people and second on swiftly taking action to keep United operating," United CEO Oscar Munoz said in a statement announcing the financial results. "We've also led the industry in taking decisive steps to mitigate the operational and financial impacts of COVID-19 -- making deep schedule reductions, drastically reducing spending and aggressively raising liquidity."
"While we are still in the midst of this crisis, we will not hesitate to make difficult decisions we believe will ensure the long term success of our company," Munoz continued.
United received approximately $5 billion from the federal government through the Payroll Support Program under the "Coronavirus Aid, Relief, and Economic Security" Act, the company said, using that funding to pay salaries of employees through Sept. 30.