United’s top management executives will have a 50% cut in their pay, according to a letter from United CEO Oscar Munoz and President Scott Kirby to the company’s 100,000 employees — which was made public Sunday night.
The airline has already carried one million fewer passengers in the first two weeks of March than a year ago and it expects to suffer a $1.5 billion reduction in revenue for the month, according to the letter.
“The bad news is that it’s getting worse. We expect both the number of customers and revenue to decline sharply in the days and weeks ahead,” the letter said. The letter said the reduced schedule could even extend into the summer travel season, a key period of air travel and airline profitability.
United said even with the deep cuts in its schedule, it expects to fill only 20% to 30% of seats on the planes. In 2019, United filled 84% of its seats with paying passengers over the course of the entire year.
Health officials have urged Americans to stay inside as much as possible and not to travel, both to protect their own health and to reduce the risk of the disease spreading. The federal government has placed sharp restrictions on international travelers flying to the United States.
“When medical experts say that our health and safety depends on people staying home and practicing social distancing, it’s nearly impossible to run [an airline] business,” the letter said.
“We are not going to count on any kind of government intervention,” Kirby said at the time.
But clearly the situation has deteriorated far more than United management or executives at other airlines anticipated.