United to cut capacity by 50%, execs take salary cuts: 'This crisis is moving really quickly'

David Caplan
March 15, 2020 - 11:35 pm
United Airlines plane

Photo by PA Images/Sipa USA

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NEW YORK (1010 WINS) -- United Airlines is introducing drastic measures following a large drop in business from the coronavirus pandemic: It plans to cut capacity by a whopping 50 percent for April and May, and is cutting in half the salaries of its Corporate Officers.

In a letter to the "United family," CEO Oscar Munoz and President J. Scott Kirby wrote "Tomorrow (Monday), we will 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."

United is also seeking to trim its expenses. "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," they wrote. "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%."

Munoz and Kirby admitted, "We expect both the number of customers and revenue to decline sharply in the days and weeks ahead."

United began cutting back in January, they wrote, by "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." 

The letter concluded, "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."