United Airlines issues statement to employees following CARES Act passage

United Airlines (NASDAQ: UAL) has announced that its CEO, Oscar Munoz and president, J. Scott Kirby, have issued a statement to United´s nearly 100,000 employees, the company said.

The statement said United expects to receive approximately USD 5 billion from the federal government through the Payroll Support Program under the CARES Act — to be used to protect the paychecks of United employees. This government support does not cover total payroll expense, but the company is keeping its promise that there will be no involuntary furloughs or pay rate cuts for US employees before September 30.

Payroll represents about 30 percent of total costs. Because fixed operating and non-payroll costs like airport rent, supplies and infrastructure are significant, the company said it has been aggressive in reducing the company´s schedule, slashing capital expenditures, scaling back our work with vendors and consultants and cutting executive salaries in half.

The company said it will load a revamped schedule that will further reduce capacity to about 10% of what had been planned for May at the beginning of this year. Similar reductions are expected to the June schedule.

Travel demand is essentially zero and shows no sign of improving in the near-term. In the first two weeks of April, fewer than 200,000 people flew United, compared to more than 6 million during the same time in 2019, a 97 percent drop. The company expects to fly fewer people during the entire month of May than on a single day in May 2019.

In 2019, United and United Express operated more than 1.7 million flights carrying more than 162 million customers.