United Announces Cost-Cutting Initiatives

In response to current market conditions, United Airlines (NYSE: UAL) today announced a series of measures that will save the company approximately $100 million annually. The initiatives, which begin this quarter, include closing three reservation centers, a maintenance line and converting five stations to United Express service. These actions, along with United’s reduced flying schedule, will result in the airline reducing its staffing by about 1,250.

“United is facing its toughest challenge ever,” said Glenn Tilton, United’s chairman, president and chief executive officer. “These actions are unfortunately necessary given the current weak revenue environment. Like other airlines, we need to make sure that we correctly match supply with demand. These painful cuts will lower some of our costs, but they will not provide the labor-cost savings we need for our recovery plan to succeed.”

“We regret the necessity of making these decisions because of the impact it will have on our employees, their families and their communities,” Tilton continued.

United has developed transition assistance plans to help employees affected by these measures. The company's efforts go beyond what is contractually required and beyond company policy for non-union employees. United will offer eligible employees the option of a special leave to retirement. Eligible employees will also receive severance pay, relocation assistance, and will continue to receive medical and travel benefits for a period of time. The company also will offer resources such as career assistance, financial advice and society and family services.

“Our goal is to be as helpful as we can be during this extremely difficult process for everyone,” said Tilton.

Station Conversions

Effective Jan. 7, United will convert mainline flying to United Express service at the following five stations: Eugene, Ore.; Medford, Ore.; Cedar Rapids, Iowa; White Plains, N.Y.; and Syracuse, N.Y. United Express carriers – SkyWest, Air Wisconsin and Atlantic Coast Airlines – can more efficiently serve these stations.

In most cases, United Express will provide more daily flights, utilizing 50-seat regional jet aircraft, enabling United to continue to serve these communities and our customers.

This action will result in the furlough of approximately 150 employees.

Maintenance Staffing Adjustments

Additionally in this quarter, United will close down one of the airline’s three Boeing 757 maintenance lines at its Indianapolis maintenance center, resulting in the furlough of 250 mechanics from Indianapolis. The number of United’s 757s reaching the age when they require a heavy maintenance visit has peaked, and this line is no longer necessary. United will also reduce line maintenance positions by 160 related to schedule reductions.

Reservation Centers

Because of a 25 percent year-over-year drop in call volume to United’s reservations line, the company on Jan. 4, will close its reservation offices in San Francisco, Long Beach and Indianapolis. This will result in the furlough of 686 employees. United will continue to serve customers through its remaining nine reservations centers in Chicago, Denver, Detroit, Honolulu, Seattle, Sterling, Va.; and Bloomington, Fort Wayne and South Bend, Ind.

Additional Adjustments Expected

United is reviewing all aspects of its worldwide operations and will soon announce additional adjustments to its schedule and staffing levels. 

United operates more than 1,900 flights a day on a route network that spans the globe.