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Update on Financial Implications from COVID-19

Date: March 17, 2020

Ladies and Gentlemen:  

Our lives are changing in ways that were unimaginable just a week ago. Many are expressing uncertainty, trepidation and fear resulting from the worldwide pandemic and actions undertaken by governments around the world and by management that directly impact our work life. This is a health and financial crisis and the impact will be devastating to many Flight Attendants and other workers across the country and around the world. 

We expect a difficult period for the next several months, keep in mind we have Contractual provisions to protect us and on how to deal with any reduction in force resulting from the collapse in air travel. Line of Flying values will be low, but our Contract provides for a minimum monthly pay of 71 hours. Our industry leading job security protections require before anyone is involuntarily furloughed that all voluntary options be utilized first. To manage the loss of flying resulting from this crisis, there are many tools in our Contract, including job sharing and partnerships, Special COLAs, lower line averages, and ultimately Voluntary Furlough, that can be used to mitigate a surplus in manpower.

As you know, bidding for our April lines of flying has been delayed yet again due to the evolving impact on the flying at United Airlines. The aircraft schedule has changed so significantly it resulted in an unprecedented delay. There are and will be significant reductions in flying that will have an immediate and adverse impact on our earnings and the flying that remains operational will be at risk due to the ever-changing response to the global crisis.

Line averages will be at unprecedented low values and there will be no open time for the April bid month during the normal real time trading window normally scheduled on the 23rd of the month nor the seniority trade window normally scheduled on the 27th of the month. All flying will be incorporated into the lines of flying for bid as we work to support our entire Flight Attendant community.

We are taking a series of steps that may result in actions we would have never otherwise have taken in an effort to save our livelihood and protect the Members of our Flight Attendant community. We are meeting with the other labor leaders at United Airlines to best coordinate our efforts and with senior management to understand the actions they are undertaking to protect the viability of our Company.  

Together with the other labor leaders at United Airlines, we have engaged in substantive discussions to undertake a thorough analysis of the situation currently confronting our Company and the aviation industry. Yesterday, the leaders of AFA, ALPA, IAM, and IBT joined together with United management calling on Congress to act quickly to protect our livelihoods. Prudent steps put into place to combat the spread of the COVID-19 virus by restricting air travel have created a fast-moving financial crisis.  While the situation remains extremely dynamic, this is what we know:  

  • United is projecting revenue to $1.5 billion lower than the same period (March) last year.
  • The number of customers and revenue is expected to continue to decline sharply in the days and weeks ahead – United carried one million fewer passengers in the first two weeks of this month compared to the same time last year.
  • The financial impact of this crisis is much worse than the stark downturn in the after math of the September 11th attacks.
  • United has dramatically cut flights for April and May and flying reductions are expected to continue into the peak summer travel season.
  • United management is looking for significant cuts to quickly reduce payroll while, at the same time, identifying other areas where changes can be made to conserve cash in direct response to projections of a 95% decline in 2nd quarter revenue

 

The following is publicly available financial information for United Airlines:

 

FORM 8-K (March 9, 2020) 

FORM 8-K (March 10, 2020)

Press Release: A Message From Oscar Munoz and Scott Kirby (March 15, 2020)

Importantly, while we are working hard to protect all Members, we have reached agreement to protect those Flight Attendants who are currently on probation. This agreement will provide them recall rights in the event they are released from United Airlines due to the drastic reduction in flying.

LINK TO PROBATIONARY LOA

While the April DSL has not been finalized, as of this writing the following are the international flights the company is planning to operate in April barring any additional unforeseen changes.  No international flying is planned to be assigned at several bases.

 

Without regard to the bases to which this flying will be assigned, the following international routes are expected to operate during the April Schedule month.

 

EWR – AMS

Daily

EWR – BOM

Daily

EWR – DEL

Daily

EWR – DUB

Daily

EWR – FRA

Daily

EWR – LHR

Daily

EWR – MUC

Daily

EWR – NRT

5X

EWR – SJU

Daily

EWR – TLV

Daily

IAD – FRA

Daily

IAD – LHR

Daily

IAH – GRU

Daily

SFO – FRA

Daily

SFO – HND

Daily

SFO – ICN

3X

SFO - KIX

5X

SFO – LHR

Daily

SFO – MEL

3X

SFO – MUC

Daily

SFO – NRT

4X

SFO – PPT

3X

SFO – SIN

Daily

SFO – SYD

Daily

SFO – TPE

5X

Now it is time for each of us to take yet another step. We must prepare for further significant reductions in flying and the associated impact on each of us and our families. We expect that a recovery from this global pandemic and its economic fallout will be many months away so undertake these immediate steps to protect you and your family from the impact of reduced flying and other changes that may be necessary to protect the viability of our Company.  

Assess your Financial Status.

  • Prepare a household budget and cut any non-essential items.
  • Prepare a list of all creditors and a contact person. Make minimum payments.
  • Place your money in a bank in which you have no debt.
  • Attempt to secure a loan early, so you will have a cash flow.
  • Assess your Federal tax situation. You may be owed a refund or need to file an extension.
  • Be proactive. Assess your credit card debt. Look into a temporary reduction or abatement in payments.
  • Curtail all non-essential spending.

 Contact Your Creditors.

You must communicate with your creditors before any payments become delinquent, and the sooner the better. You can negotiate a lower repayment schedule before you run out of money. Be professional, but assertive. Creditors are easier to work with if they know ahead of time that there’s a problem. Also, it shows ‘good faith’ that you are concerned about your debts and intend to pay.

The goal is to make the amount of money you’ve saved last as long as possible. Pay what you can on a regular basis, even if it is less than expected. Partial payments may keep collection agents away. Follow-up all telephone conversations with a letter and keep documentation. Even in the worst-case scenario, it takes a long time for collections, repossessions and evictions to occur. Contact credit counselors who can help you sort out your financial affairs. Be sure to remember to contact the creditors that are automatically payroll deducted.

Even if you can’t pay creditors the amount they want, make your best effort to pay something regularly. This holds arrears as low as possible and lets the creditor know that you are doing all you can. Partial payment may keep your account from being turned over to a collection agency.

Put your payments in order of importance: this will help you pay first things first when money is short. Generally, your most important payment will be the mortgage or rent payment, followed by utilities, health insurance and car payments. And after the initial contact, it’s important that you keep in contact with creditors – every two weeks or so. This reassures the creditor, shows a responsible attitude toward your obligation and may keep the creditor from ‘hounding’ you.

Prepare a household budget.

A budget helps you see where you spend your money and where you can save. 

Your budgeted expenses should include:

  • Fixed expenses, including: mortgage, rent, taxes, insurance, loans, installment payments, credit card payments and any other monthly payments.
  • Monthly expenses, including: food, gas, repairs, dues, recreation, prescriptions.
  • Future expenses, including: income/property tax and any other outstanding debts.

 Your budgeted income should include:

  • Any remaining income
  • State disability insurance benefits
  • Workers’ compensation checks
  • Savings
  • Social Security
  • Any furlough pay
  •  Unemployment compensation
  • Other pension funds

 Your assets may include:

  • Cash value of insurance policies
  • Equity in your home
  • Prepaid burial or funeral policy
  • Resale value of vehicles (including boats and snowmobiles)


Once you identify this, you are now ready to adjust your expenses, negotiate with creditors and use assets in the most effective way possible.  

We are facing an unprecedented threat to our careers and we must take immediate actions so that once this global pandemic subsides we are best positioned to return to the skies.  Any decisions we undertake will not be made lightly.  We will forcefully advocate for the best outcome for all Flight Attendants. Flight Attendants are the heart and soul of United Airlines.

We are an integral to the success of our Company and we must all pull together to defend and protect our careers. 

We will come through this together.  We have faced other challenges head on as a community of Flight Attendants and this time will be no different

Here’s what you can do to help:

The COVID-19 virus can spread quickly and easily through close interactions with other people. Help break that cycle follow the recommendations of the Center of Disease Control (CDC). Vigorously follow the recommendations of the Center for Disease Control to protect you and your family. Importantly, insist they your flying partners, friends and family do the same. For more details on how to best protect yourself review this information from AFA International.  

Stay up to date and informed by visiting our website.  We will provide you with current information on the status of our efforts to protect our profession and help our Company weather this global pandemic.  

  • Suspend the assessment of points for absences during this period
  • Restoration of sick leave for anyone who is subsequently diagnosed with COVID-19 Modify dependability monitoring to ensure Flight Attendants who are exhibiting flu-like symptoms or who are caring for anyone in their household with flu like symptoms will not count toward dependability monitoring during this health crisis.
  • Allow Flight Attendants to wear non-latex, powder free gloves at any time while onboard the aircraft
  • Ensure all aircraft meet the federal requirements for access to soap and running water and eliminate occurrences of inoperative lavatory water systems
  • Stock sanitizing wipes onboard the aircraft for Flight Attendant use
  • Board an alcohol-based (60% or greater alcohol content) hand sanitizer, in convenient locations onboard the aircraft, for Flight Attendant use
  • Suspend the use of pickup pans for trash collection and switch to trash bags for pickup
  • Suspend the use of reusable hot towels

 

Importantly we have reached an agreement that provides sick leave pay and discipline protections in the event Flight Attendants or a member of their household is diagnosed with the COVID-19 virus.

LINK TO SICK LEAVE PROTECTION LETTER

Keep in mind, should it be determined that a Reduction in Force is necessary, there are contractual mechanisms by which voluntary headcount reduction programs can be accomplished by management. Currently, Special COLAs are currently being offered for April and May along with Job Shares for May.  Sign up for these voluntary headcount reduction programs to the extent you are able to do so. You can review information on unemployment compensation at the following Department of Labor resource page.

While it is clear that due to the drastic reduction in flying we expect the need for significant headcount reductions as management right sizes the operation to match global travel conditions. Voluntary options provide you with job protections and medical benefits for the duration of your time away from work. Additionally, you will help protect the job of the more junior Members of our community. 

Be prepared, our circumstances will likely get worse before they get better and flying will be significantly impacted for what is expected to be an unpredictably extended period of time. Emergency measures are being asked for will be required from all workers to ensure the viability of United Airlines. To date management has taken the following steps and we expect other changes will be necessary:

  • Reduced capital expenditures
  • Raised additional capital
  • Postponed projects not critical to the operation (i.e. new uniforms)
  • Hiring Freeze
  • Suspended share buybacks
  • Cut senior management salaries

Industry analysts noted in a report on Monday that, “the collapse in air travel demand has the potential to materially reshape global aviation meaningfully more than the events of 9/11…like the virus itself, demand destruction will exact the greatest toll on the weak and infirm.” While the report does not identify those carriers who are “weak and infirm” they do note the following, ‘to the extent that long haul/low cost airlines and possibly others permanently exit the Atlantic, long-term international profitability at Air Canada, American, Delta and United is expected to emerge higher than pre-crisis levels.” 

United Airlines has spent the last decade rebuilding its balance sheet by reducing debt, keeping cash on hand, purchasing aircraft and is well positioned to navigate this crisis.  

Stay strong, stay engaged and be vigilant. Fear and confusion will only bring further harm to our community. Know that we are working closely with your Local Council Representatives, our Committees and the professionals at our International Office. We will keep you informed on the status of our talks with the other labor leaders and the management at United Airlines. 

In Solidarity,

The United Master Executive Council Officers

                  MEC President                                  MEC Vice President                           MEC Secretary-Treasurer

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