According to United Airlines executive Chairman Oscar Munoz, if airline industry in the United States wants to survive, it will have to cut its labour costs by half.
Such cuts would mean either layoffs or reductions in worker hours and pay, Mundoz, former CEO of United, explained in an interview to CNN Business.
According to him, the crisis created by COVID-19 pandemic is “orders of magnitude larger than anything we’ve ever seen.” Although the industry “has gone through hell and back” before, this time the situation is far worse than, for example, the downturn after 9/11.
According to Mundoz, although the major airlines have enough financial resources to survive through the next year, the longer it takes for the industry to recover, the more bankruptcies and closures there will be. The only way out of this is reducing payroll, meaning job cuts or pay cuts.
“We tell our employees that we are going to be a smaller airline for some time and we hope to get back to the place where we were. But we think that’s quite a bit a ways out,” Munoz said. United is planning to put almost 3000 pilots on unpaid leave as the CARES act expires in late September, in addition to tens of thousands of other workers. “Hopefully things recover and we can bring everyone back,” Munoz said of them.