Estimate for U.S. airline industry recovery: 2024

UNITED: United Airlines recently confirmed it would have to furlough more than 16,000 workers if the payroll protection program isn't extended. Photo courtesy of United Airlines

United Airlines employees are facing drastic pay cuts – full-time employees' hours will be reduced to 30 a week – as the airline attempts to keep the company afloat during the COVID-19 pandemic.

United is one of the island's largest local employers. United declined to comment on questions regarding exactly how many Guam-based employees would be affected, stating this is a human resources issue.

In the last month, most of United's flights have been canceled with the exception of flights to Narita, Japan, and Honolulu, Hawaii, as well as lifeline flights between Guam and other islands.

United is getting $5 billion in Paycheck Protection Program funds under the Coronavirus Aid, Relief and Economic Security Act.

A letter to union members from Michael Klemm, president of the International Association of Machinists and Aerospace Workers, notes the union's concern that any reduction in hours for employees is "unacceptable under the CARES Act."

A letter from Greg Hart, executive vice president and chief operations officer, stated the pay cuts are in line with federal guidelines. They're also necessary to keep as many workers as possible employed and the company afloat. He points out that 90% of flights have been cut and "travel demand is essentially zero ... and we don't know when it's going to come back."

"And importantly, even with a federal government grant that covers a portion of our payroll expense through Sept. 30, we anticipate spending billions of dollars more than we take in for the next several months, while continuing to employ 100% of our workforce. That's not sustainable for any company and that's why we are making difficult decisions across our entire business."

He said spending cuts have been put in place, including slashing discretionary spending and putting a freeze on hiring, and the chief executive officer's and president's base salaries and bonuses were cut by 100%, and officer salaries were reduced by 50%.

"While our contract allows for a reduction of full-time employees all the way to 20 hours, we will commit to an equivalent number of 30-hour bid lines," he stated. "We are making similar changes for our management personnel and those changes will be announced Monday."

In an April statement, airline officials said the federal funds would be used to pay for the salaries and benefits of tens of thousands of airline employees.

"These funds will cover a portion of our pay and benefits costs through Sept. 30, and we are thankful for the support provided to our employees and their families by the CARES Act. This financial support is critical to our people, who are ensuring air service to communities throughout the country and supporting the shipment of much-needed medical supplies and travel of health care professionals around the globe," said United Airlines spokesman Frank Benenati.

The airline's parent company also expects to issue warrants to the federal government to purchase up to 4.6 million shares of UAL common stock.


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