United Slashes Flight Schedule Further as Travel Demand 'Essentially Zero'

United Airlines will cut its travel schedule by 90% in May as demand is 'essentially zero.' It also warns employees payroll cuts could be coming.
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United Airlines  (UAL) - Get Report, saying that travel demand is “essentially zero,” will cut its travel schedule by 90% in May and warned employees that payroll cuts could be coming.

“Travel demand is essentially zero and shows no sign of improving in the near term,” said CEO Oscar Munoz and President Scott Kirby in a memo to employees. “While we have not yet finalized changes to our schedule for July and August, we expect demand to remain suppressed for the remainder of 2020 and likely into next year.”

The executives said the airline expects to “fly fewer people during the entire month of May than we did on a single day in May 2019.”

United on Wednesday said it would receive $5 billion in government assistance from the government’s $2 trillion coronavirus stimulus package.

The funds contained in the stimulus package will help the airlines pay employees but obliges them not to cut jobs through Sept. 30, according to Bloomberg.

But United said it has “some tough decisions” to make about the size of its workforce come Oct. 1.

“The challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as Oct. 1,” said Munoz and Kirby.

The bailout agreement, reached Wednesday with the government, covers all major carriers, according to the Treasury Department.

American Airlines  (AAL) - Get Report said it would receive $5.8 billion in aid, while Southwest Airlines  (LUV) - Get Report will get $3.2 billion in assistance.

Treasury Secretary Steven Mnuchin said the program “will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”

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