United Airlines Will Try to Avoid Further Job Cuts

United Air hopes to avoid further job cuts, the CEO said. Carriers that participated in a  government may not cut or furlough staff until the end of September.
Author:
Updated:
Original:

United Airlines  (UAL) - Get Report is hoping to avoid further staff cuts but still must significantly reduce labor costs as the coronavirus hampers air travel and the U.S. economy. 

United Airlines' Chief Executive Scott Kirby on Wednesday afternoon told shareholders that the company is hoping to avoid staff cuts.

Under the terms of the bailout funds they received this year, airlines are not allowed to cut or furlough employees before the end of September. 

"We'll be taking time in the months ahead to work with our union partners on creative ideas that would involve reduced hours and leaves of absence instead of furloughs," said Kirby.

Kirby said the airline would be able to reach a deal with its unions to avoid the kind of cuts United's competitors have said they might have to make. 

This week, United shares rose after the company reported a decrease in customer cancellations and an increase in demand for the remainder of the second quarter. 

But "by the time we get to October, we're almost certain that demand will continue to be down significantly," Kirby said Wednesday. 

In April, the company’s gross bookings dropped more than 95% from a year ago, with customer cancellation rates reaching records, United said in a filing with the Securities and Exchange Commission.

But “as of May 18, the company has seen a reduction in customer cancellation rates and a moderate improvement in demand” for domestic and some international routes for the rest of the second quarter, it said.

United expects its scheduled capacity to fall 75% in July from a year earlier. Scheduled capacity for May and June 2020 was reduced by some 90% from 2019 levels.

At the time of publishing, United Airlines' shares were trading little changed at $24.95.