United Airlines CEO Says Travel Dropped 97 Percent, Warns Employees to Prepare for Job Cuts
The lack of demand for flights amid the COVID-19 outbreak has caused significant financial damage to the airlines
In a joint letter issued to United Airlines employees Wednesday, CEO Oscar Munoz and President Scott Kirby said the company has seen a 97 percent drop in demand during the first two weeks of April compared to the same time frame in 2019.
“Travel demand is essentially zero and shows no sign of improving in the near-term,” Munoz and Kirby wrote. “To help you understand how few people are flying in this environment, less than 200,000 people flew with us during the first two weeks of April this year, compared to more than 6 million during the same time in 2019, a 97 percent drop.”
The pair added that they “expect to fly fewer people during the entire month of May than we did on a single day in May 2019.”
The company continued on to say that the government funding they receive can help protect U.S. employees from involuntary furloughs and pay rate cuts through the end of September. But pay cuts will likely come in the months to follow, United warned.
“The challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as October 1,” the statement read.
Munoz, who has been United’s CEO since 2015, already opted to forfeit his salary until June 30, according to the Wall Street Journal. Delta CEO Ed Bastian recently made a similar announcement in a release from the company, while Southwest CEO Gary Kelly will incur a 10 percent pay cut.
Sydney-based CAPA Centre for Aviation predicted last month that many airlines will have a hard time bouncing back financially as they dip into their financial reserves amid the global outbreak.
“Emerging from the crisis will be like entering a brutal battlefield, littered with casualties,” CAPA said, warning that, “coordinated government and industry action is needed — now — if catastrophe is to be avoided.”
Though the three major U.S. airlines — Delta, United and American — despite the massive financial hit, will likely survive, CAPA added.
The three flight companies have dramatically reduced the number of flights and areas to which they fly in conjunction with Centers for Disease Control, World Health Organization and State Department safety warnings. Domestic flights have also been reduced in number and frequency across the industry in response to low demand.
The CDC has said that it “does not generally issue advisories or restrictions for travel within the United States,” but noted that airports can be high-risk areas because they are typically densely populated. The agency also recommends avoiding traveling to domestic destinations with a high number of COVID-19 cases.
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