Load Factors Expected To Drop Up To 30 Percent Even With Cuts In Place

United Airlines CEO Oscar Munoz and airline president Steve Kirby sent a memo to the carrier's employees as well as the media Monday outlining the steps that are being taken to try to protect the airline during the Coronavirus outbreak.

"In just the first two weeks of March, we have welcomed more than one million fewer customers on board our aircraft than the same period last year. We're also currently projecting that revenue in March will be $1.5 billion lower than last March," the memo said.

"The bad news is that it's getting worse. We expect both the number of customers and revenue to decline sharply in the days and weeks ahead.

"Since late January, we have taken steps to aggressively manage this crisis and to keep you informed every step of the way - sharply reducing schedules, imposing a hiring freeze, introducing a voluntary leave program, dramatically reducing discretionary spending, cutting CEO base salary 100% and deferring a salary increase. Our competitors have started to follow suit: on Friday, Delta announced a 40% schedule reduction and a 100% salary cut for their CEO and over the weekend, American said it will reduce its international capacity by 75%.

"We took early, aggressive action because we have been determined to do everything possible to avoid painful steps that affect your paycheck. But, based on the severity of the situation, that no longer appears realistic.

"This weekend, we began conversations with our union leadership about how to reduce our payroll expense in a way that minimizes what we know will be painful for all of us. Earlier this evening, we convened a call with Corporate Officers to update them on the severity of the situation and let them know we will be cutting their salary by 50%.

"Let us be clear: these are not the only next steps. Tomorrow, we will announce an approximately 50% cut in capacity for April and May. We also now expect these deep cuts to extend into the summer travel period. Even with those cuts, we're expecting load factors to drop into the 20-30% range -- and that's if things don't get worse.

"Together, we're facing an unprecedented challenge. When medical experts say that our health and safety depends on people staying home and practicing social distancing, it's nearly impossible to run a business whose shared purpose is "Connecting people. Uniting the world."

"We both hate to have to write a note like this, but we have made a commitment to be honest and transparent with you. While it's now clear that this is going to be painful for our people, we promise that you are at the very top of our priority list. We are working night and day on support and ideas to keep as much pay as we possibly can flowing to you -- even if it gets worse from here and demand temporarily plummets to zero.

"This crisis is moving really quickly. It's having an impact on nearly every aspect of our lives, and it may feel to you like everything is changing. But, the most important thing about our business hasn't changed: you've shown us that even in these difficult times, we're still United and focused on caring for our customers and each other together. That's always been the essential ingredient to our success. It's what will get us through this crisis in the near term, and it's also what will allow us to fulfill United's incredible potential in the long-term."

(Source: United Airlines news release. Image from file)

FMI: www.united.com