United Airlines no longer sees any risk that it will not survive the pandemic, but is still warning employees that painful cuts may be ahead.
Kirby: United MileagePlus Loan Secures Survival of Airline
In a video message to employees seen by Live and Let’s Fly, CEO Scott Kirby labeled United’s $5 billion loan using the MileagePlus program as collateral as the “most important financial milestone” of the current crisis. Calling the deal both “creative” and “innovative”, Kirby is confident United’s survival is no longer in danger:
“That’s really important because what it means is, with all the other stuff we’re doing, is by the end of the third quarter, we’re going to now have $17 billion of available liquidity. That’s important because what it does is it essentially take the worst-case off the table.”
The worse-case scenario is collapse and liquidation. Kirby added that “even if this virus lasts for a long time, we now have the resources to make sure that we make it through and get to the other side.”
From the very start of the pandemic, Kirby has made the survival of the company his number one priority. In internal memos and public interviews, Kirby has repeatedly zeroed in on a “survival at all costs” mentality.
Time for celebration? Not so fast says Kirby.
Good News, But Painful Cuts Still Likely
After celebrating that United’s survival was secure, Kirby transitioned to the looming job cuts.
“While the is great news, it doesn’t mean we’re out of the woods.”
June revenue down 93% over June 2019 and July revenue is expected to be down 85%. “Borrowing the money alone is not going to be enough to save us,” says Kirby, noting that the loan must be paid back with interest.
Prior to the pandemic, $17 billion represented five months of it expenses. Now it must last far longer.
“We’ve got to make the 17 billion last. And we have to accept the possibility that demand is not going to return to normal until there’s a vaccine, and a vaccine that’s been widely distributed to the population.”
Consequently, Kirby again stressed how important it is for employees to consider voluntary separation packages and also expressed hope that a deal could be cut with unions to keep as many people on the payroll at reduced hours as possible.
Kirby hopes that with more employees waiting for increased hours, United can quickly ramp up operations once a vaccine is widely available.
“When there’s a vaccine, it’s going to be a really quick recovery — we’re set up to bounce back, be aggressive, and go all-in and win the battle at that point in time.”
CONCLUSION
United Airlines no longer believes its survival is in danger, even if the pandemic continues for a “long time”. But the latest loan is about company survival, not employee survival. United still sees painful cuts ahead for its workforce.
> Read More: United Uses MileagePlus As Collateral For New $5 Billion Loan, Reveals Treasure Trove Of Program Info
image: United
I am glad to see that the higher ups at United are doing something other than trying to take wages from its employees. First United tells the government that without intervention that there would be massive layoffs of employees. Thanks to a $3.5 billion gift from the government the 93,000 employees with an average income of just over $71,000 had their wages paid through September 30, 2020. Ever since then United has lied to and tried to intimidate its employees into giving up their wages to help the company come out of this stronger than ever before. We the employees just want to survive with our health, our lives and what we have worked so hard for.
United has not lied to us, but rather our executive team is being rather realistic. While I sympathize with my fellow flight attendants, it would be foolish to think that we can continue on with the status quo. We should be thankful that we got the cares act passed as it basically amounts to enhanced unemployment while still on the company payroll.
The company has to have more people retire in order to avoid layoffs; the company cannot continue to employee 25,000 of us when there is only flying for about 6,000 of us (based on July’s flight hours). That is economics 101. There will be cuts one way or another: layoffs, job shares, or union concessions such as pay cuts. So far the union has ruled out pay cuts, so we are left with the former two. (I must say I agree with no pay cuts because we will not get them back given the debt load we are taking on).
I am thankful for everyone on my colleagues who retired as it saved my job. I plan on taking a voluntary furlough or job share to save another come October; I believe in the motto that we are in this together. I am taking the time now to cut my spending and save more in my emergancy fund. If everyone of us did this we could all make a contribution and get through this on the side.
But make no mistake about it, Coronavirus has set us back a decade. The company will have to pay all this debt back and it will take a miracle to get further contractually improvements even if the economy improves. We have to deal with the challenge of now, but must not fool ourselves on what is to come.
So what should United do that would make you happy and operate with an 85% reduction in revenue?
If they keep feeding people the food I received in business from Newark to London on Saturday 6/20 their business is at risk.
Currently they’re trying to poison their customers with garbage.
Hopefully if laid off due to hours we can still get flight benefits for ourselves and family
I left Atlanta airport on Friday morning — it was about 60% full. Today, I flew to Charlotte for a connecting flight to Atlanta — and, wow, good Lord, Charlotte was like three days before Christmas. IT. WAS. PACKED. The food court was packed, the gates were packed, the concourses were packed, and both of my AA flights were packed.
Aviation is quickly recovering.
Just in time for the second wave and the re-lockdowns that will follow.
my SFo-EWR flight was full on Saturday. 787-9 as well.
What a cute family portrait in the headline image.
So sad to hear the frontline United workers
have to pay for this. The airlines have been irresponsibly engaging in stock buy backs,
tax savings accounts and profits have gone to their CEOs and stock holders not to the frontline workers. They should have been
Investing in R+D, equipment, higher worker wages, worker retraining, better retirement plans, and medical leave. They should have paid attention to the needs of passengers…
totally ignored; narrower seats, baggage fees, etc. If you don’t like this type of management, contact your congressmen and hold feet too fire. Maybe it’s time for government takeover of airlines.
How is “higher worker wages” an investment?
That’s an expense.
Are you not aware of the multi-billion dollar fleet replacement program in progress?
A vaccine??? Yes and we all know how the flu vaccine has cured the flu forever, nobody gets it anymore once they are vaccinated right?? what a crock of feces.