Economy

United Airlines Announces Executive Staff Cuts

United Airlines

The “friendly skies” of United Airlines are not so friendly for employees facing layoffs as the pandemic has devastated the airline industry.

United said it will reduce its staff of 67 officers by 13, CNBC reported on Friday (May 29). The officer-level executives work on the airline’s network, regional hubs and as airline representatives to the communities they serve, the network said. The airline did not specify how much money it will save with the move.

COVID-19 has caused air travel to shrink to its lowest level in decades. While the number of travelers has grown slightly in the last month, data from the Transportation Security Administration (TSA) showed 87 percent fewer people passed through U.S. airport checkpoints on Thursday (May 28) compared to the same day one year ago.

Chicago-based United Airlines, like its rivals American and Delta, is also reportedly offering voluntary separation and other packages to thousands of employees.

But United will have to wait for three months before it can issue pink slips. Under the terms of the Congressional $25 billion bailout for the airline industry, employees must be kept on the payroll at least through the end of September.

In a response to a question about the company’s future, United Airlines CEO Scott Kirby, who just stepped into the top post last week, told investors and analysts during a webcast conference on Thursday (May 28) that filing for bankruptcy is not in the cards for the airline. He called it “the dumbest question possible.”

“Zero percent, no chance,” Kirby said. “It’s worse for shareholders. It’s worse for creditors. It’s worse for employees. It’s worse for every constituent that we have.”

In its first-quarter filing with the Securities and Exchange Commission (SEC) last month, United reported $9.6 billion in liquidity after it received $4 billion in loans, aircraft financing deals and equity sales. The amount did not include $5 billion in payroll support from the government.

CNBC said United declined to say how much money would be saved by the resignations or layoffs.

PYMNTS reported on Wednesday (May 27) that the airline industry has been especially hard hit by the global pandemic as the shutdown has sunk domestic and overseas air travel. U.S. air travel was off 96 percent in April compared to the same month in 2019. The Memorial Day weekend brought an uptick in air travel as more than 1.5 million passengers passed through security checkpoints at U.S. airports during the long weekend. But more than 12 million flew during the same period in 2019, according to TSA data.

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