As United Airlines fights for survival, the “other shoe dropped” yesterday: it will not just be frontline employees who feel the pain.
Kate Gebo, United Executive Vice President of Human Resources, laid out the news to employees. The extended memo, obtained by Live and Let’s Fly, includes more dire predictions and all but assures job losses are on the horizon for United’s management and administrative (M&A) employees.
Here are some highlights from the note:
- Between May 16 and September 30, domestic M&A employees will be required to take 20 unpaid days off.
- For non-operational M&A employees, a four-day work week will be implemented with Fridays being the assumed day off.
- No vacation rollover days, except as required by state law.
- At least 50% of employee vacation time must be used by September 30tg.
- United planning for an M&A population that will be “at least 30% smaller” than it is today, with some work groups impacted more significantly than others.
- Affected employees will be notified in mid to late July for an October 1st effective date.
- Employees encouraged to consider Voluntary Separation Program
- “If you participate…you will have the opportunity to maintain active pass travel privileges and medical benefits for an extended period of time, along with some continuation of pay.”
- United will not be offering a cash severance package to any departing member of the M&A team effective October 1st.
- “[E]nsuring United’s future recovery means we are not able to make this option available. Because of this, we’re trying to give everyone as much notice as possible that changes are coming, and we’re making the voluntary options as attractive as possible.”
Devastating News For United Employees…
I think there is no other way to describe this news except as devastating. With demand down 90% and likely to recovery slower than initially hoped, a 30% reduction in staff is sadly just the start. But this is not just a stat: every job has a story. I’ve spoken to several employees this week who are already starting to look for new work. One person told me, “Just two months ago it seemed like I had my career locked up and now it’s been ripped away in an instant. Very depressing.”
Very depressing indeed and my heart goes out to the wonderful men and women who faithfully and diligently come to work each day, simply trying to make an honest living.
CONCLUSION
One employee I spoke to said, “Was this news really necessary now? Couldn’t they just have waited till July to see how things went?” But another employee expressed the opposite conclusion, stating, “Well, at least they told us now and didn’t spring it on us in the summer.” United finds itself in a lose-lose situation as it grapples with its biggest battle in its nearly 100 year history.
The one bright spot for M&A employees (like myself, but at a different airline) is that most of them have college degrees and experience that can be applicable in many different fields. I love my airline job, but if I get laid off I can probably find a tech company willing to pay me more than what I’m making now. While losing one’s job is always depressing and difficult, I don’t feel quite as bad for M&A employees (again, I’m one of them, so I know what I’m talking about) as I do for mechanics, flight attendants, and pilots, who may have a much harder time finding work in a shrinking industry.
Why not just lay off Kirby and Munoz.. that should save a shit ton of jobs.
Kirby and Munoz already took a 100% pay cut.
Oscar Munoz and Scott Kirby are foregoing their base salary, which is about 10% of their total comp package. Lower level employees are being offered the “opportunity” to take a leave of absence — at 100% of their pay.
Whose the biggest loser here?
Its hard times for Airline businesses all over the world. I hope things get back to normal soon.
Out of curiosity – not being an American – what would someone laid off after, say, 25 years of service find “attractive” about the voluntary options now that she / he cannot receive a cash severance package option?
Is offering a cash severance package mandatory at the federal level, at the state level, or does it vary by state?
Employment laws vary by state. One employee I spoke to said that a proper incentive would be 15 years of pass travel plus healthcare until 65 (when medicare kicks in).
Paid healthcare until 65 would be worth it if United could be trusted to keep that promise, but past experience shows “guaranteed” paid healthcare for retirees is the first thing that companies throw overboard when they’re running out of money, and they often get away with it.
Cash severance is not required, but most companies offer it as part of layoff package as goodwill. Basically, what United is saying is if you voluntarily leave now through whenever the offer ends, you get to keep medical benefits (which is costly and worth it) and travel privileges. After 1 October, if you get laid off, you get nothing. Since it’s a mass layoff, there will be little opportunity for lawsuits claiming discrimination or favoritism.
Kirby is doing everything he can to preserve as many jobs as he can. It is unfortunate that there will be layoffs, but the voluntary packages coming out soon may eliminate the need for a good chunk of involuntary layoffs. Meanwhile AA is doing very little to ensure they can weather a prolonged downturn.
Just when the ship was being righted the torpedo struck. I feel horrible for them. Many must feel almost hopeless, especially if they have been there dedicating their life to UAL. The same goes for the rank and file.
Just a totally horrible, awful, disastrous situation.
I would think the government will give them more money if travel demand is still in the toilet in October…airlines seem at the forefront of who the current administration would want to keep alive and well.
I work for United Inflight. You’ve helpfully clarified a couple things for me in this here. One, I’ve received several United memos referencing M&A employees, but not the one you’re writing about here. I suppose I’ll take time later to dig through all the different ways UAL sends memos and find this particular one. I didn’t know what M&A meant. Now I know it is management and administrative employees. Two, memos are usually signed with the author’s first name, no last name or title. Unless your name is Oscar, I have no idea who you are. I have had memos signed by someone named Kate, but am only now finding out from your blog who she is. Thank you. That’s very helpful.
This certainly is horrible and devastating for airline employees, a no-win situation knowing they are soon out of a job and really no decent severance or amenities. Once you’re cut loose, the medical and travel benefits soon disappear (long before you probably need them or want to use them)….. and where would you travel to anyway with lockdowns, quarantine and major tourist sites, museums, restaurants, etc. closed or with very limited access?
Even for those who are union members that get furloughed on October 1st, (not Management or Administration) and will have some order of recall, unless it is within a reasonable amount of time (ie., maximum six months), one certainly cannot wait around with no job, no income and/or dwindling savings for recall that may or may not happen. As well, just the thought of looking for another job in another sector (because DL, AA, and basically all airlines’ employees are in the same sinking boat), along with millions of other people in other sectors also out of work and looking – let’s add college grads to the mix – would send shudders down anybody’s spine to have to compete with literally tens of thousands if not millions looking for work in the job markets.
I count my blessings (and I don’t say this lightly) that I am retired (from UAL) and totally, truly feel for my fellow coworkers, friends and relatives still in there. Right now I’m trying to encourage a relative (though with 42 years of seniority, age 62) to just throw in the towel and retire. At least they can collect the PBGC pension, IAM pension and Social Security. For many who are just not close enough to retirement age, this is going to be a bloodbath.
One should look at the positives of this crisis. US airlines are obsolete, have lots of layers in their management teams and lots of people that are just there doing not much. I think this is the time to become leaner and more nimble. I feel for all the employees that will be laid off but that is necessary to make these companies more user friendly.
@Santastico
While this will certainly make United leaner, union rules will still be in place. A wholesale restructuring of the industry is needed.
All this destruction of people’s livelihoods was unnecessary. The scaremongers who drove the lockdown and the concomitant economic ruin will not be judged favorably by history. Let’s hope at least that the US realigns itself in recognition that the CCP should never have been trusted.
I thought that if UAL took the CARES Act, they were not allowed to furlough, or cut salaries, etc before September 30th. (Making employees take 20 unpaid days off against their will is cutting salaries). ???