United Airlines bosses issue grim letter to employees, as airline expects slump in demand to last into peak summer season and affect worker paychecks

United Airlines

  • United Airlines CEO Oscar Munoz and President Scott Kirby told employees in a letter to expect a further reduction in demand that may last into the summer season, as the airline reduces capacity by around 50% in April and May.
  • The airline raked in $1.5 billion less in revenue in March 2020 than the same month the year prior with over one million fewer passengers.
  • Kirby and Munoz expect load factors to remain around 20-30% per flight with airplanes flying largely empty as the novel coronavirus continues to spread across the country.
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United Airlines is planning to reduce its flying capacity by around half in April and May, with CEO Oscar Munoz and President Scott Kirby telling employees in a letter to expect the ripple effect of COVID-19 to be felt into the summer season.

Though typically March is a busy month for the airline, the duo said that over one million fewer passengers boarded United aircraft in March 2020 compared to the year prior with a projected year-on-year revenue loss of $1.5 billion.

The end of March also represents the start of the summer season for airlines, though United doesn't expect it will make any difference with demand only expected to decrease. While the season is typically peak for airlines as travel tends to spike as consumers head abroad or to leisure destinations across the country, United is expecting factors of 20-30% on its aircraft in the next two months, with the possibility of those extremely light loads continuing into the summer months.

The cuts in capacity come as the airline industry is experiencing a sharp downturn in demand out of fears regarding the spread of the coronavirus. Airlines have been canceling and merging flights to prevent flying with low load factors that would waste unnecessary cash vital to weathering the downturn.

The spread of coronavirus as well as travel restrictions imposed by President Donald Trump already impacted United's flying with the airline largely retreating from Asia and Europe. United was one of the first airlines to announce a large-scale reduction in services to Asia beyond China to destinations including Japan, South Korea, Singapore, and Taiwan.

Following the president's recent proclamation regarding travel to Europe, United has largely cut back from transatlantic flying and is only maintaining service to a handful of European cities.

The announcement also comes as United is over one year into the grounding of its Boeing 737 Max aircraft. The planes have sat idle as Boeing works to create a fix for the aircraft following two deadly crashes attributed to the aircraft's systems.

United has been criticized for how it handled the response to the downturn caused by a sharp reduction in demand. Despite canceling numerous flights that have interrupted the travel plans of those still looking to fly, United has changed its policy on schedule changes to make it more difficult for affected customers to receive refunds.

The airline's current policy for an international schedule change of fewer than six hours allows passengers to have their funds converted into a travel voucher only to be refunded if not used for one year after the ticket was purchased.

Consumer backlash has caused United to change the policy multiple times in the past few weeks alone.

Munoz and Kirby also told employees that paychecks will likely be affected despite the company's efforts. The two are forgoing their own salaries, and the letter also stated that United's corporate officers will be receiving 50% pay cuts.

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