United Airlines served notice Monday that it will cut at least 3,400 management jobs, a minimum of 30% of its white-collar workforce, in a move that will take a bite out of its Chicago headquarters.
Kate Gebo, the carrier’s executive vice president for human resources, announced the cuts in a memo to employees. It arrived four days after United said it lost $1.7 billion in the first quarter.
“Governmental restrictions on travel, stay-at-home orders and the lack of a medical solution for COVID-19 have brought bookings and demand for travel basically to zero,” Gebo wrote. “This is forcing us to come to terms with the fact that our airline – and our entire workforce – will have to be smaller than it is today, and it’s requiring us to continue taking decisive actions.”
She said affected employees will be notified in mid to late July and that the layoffs will take effect Oct. 1. Gebo said employees who leave before Oct. 1 will get benefits such as severance and extended health coverage. After that date, laid-off management workers will not get those benefits, she said.
The company has reported having 5,500 employees at its Willis Tower headquarters. Its total management payroll consists of about 11,500 employees, a spokeswoman said.
United has applied for or received up to $9.5 billion in grants or loans, secured by warrants for stock to be issued to the Treasury Department. Some of the money is available under the CARES Act, which generally requires recipients not to cut workers’ hours.
But the airline has said that while the CARES Act protects workers through Sept. 30, it still has a gap of billions of dollars in losses, especially if demand does not pick up later this year. United is flying only 10% of its schedule.
Gebo also said management employees will be required to take 20 unpaid days off between May 16 and Sept. 30 and that some workers will be assigned a four-day workweek, with Friday being the assumed day off.
In March 2019, United extended its lease of 850,000 square feet at Willis Tower until 2033.