United Airlines Poised To Slash Payroll Costs Without Quick Bailout Amid Coronavirus Crisis
SAN FRANCISCO INT'L AIRPORT (CBS SF / CNN) -- United Airlines, which has a hub at San Francisco International Airport, says it could be forced to cut payroll costs by as much as 60% if an airline industry bailout isn't approved by Congress by the end of the month.
A letter sent to United's nearly 100,000 employees by both CEO Oscar Munoz, President Scott Kirby and many of the airline's union leaders, warns that the drop in travel demand because of the coronavirus outbreak will force it to cut its April schedule by 60%.
"If Congress doesn't act on sufficient government support by the end of March, our company will begin to take the necessary steps to reduce our payroll in line with the 60% schedule reduction we announced for April. May's schedule is likely to be cut even further."
The reduced cost could come through employee furloughs, pay cuts or a combination of the two.
United, the nation's second largest airline behind American, spent $12 billion on payroll and benefits in 2019. It announced on Sunday that it was cutting its schedule for April and May by 50%. Along with having a hub at SFO, the airline also serves Mineta San Jose International Airport.
The 60% reduction to its April schedule is due to additional travel restrictions and steps to battle the virus outbreak. Even at that reduced rate of flying, it expected to fill only 20% to 30% of seats. That is not only far below the 84% of seats that it sold throughout last year, but it is far below the roughly 65% of seats that an airline needs to sell to just break even.
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