United Airlines to lay off 10,000 workers

Trapped in a financial quagmire, United Airlines (UAL) will curtail 10,000 jobs into 2004 as part of a recovery plan devised to avoid filing from Chapter 11 and with a view to post strong numbers once again in that same year, UAL chairman Glenn Tilton said.

Mr. Tilton explained the overhaul scheme is mandatory in order to please U.S. federal authorities and get the green light for $1.8 billion worth of loans.

Once it snaps back in the black in 2004, United Airlines hopes by 2005 to pay back the loans granted by the government and write them off completely in 2007, Mr. Tilton added.

The overhaul plan includes annual savings for $2.5 billion, broken down in $1.1 billion from layoffs and the remaining $1.4 billion as part of other belt-tightening actions like dramatic cutbacks on investments, UAL President went on to say.

Those savings are to be scooped up through “an unprecedented agreement” reached with different employee categories by means of a cost reduction in the neighborhood of $5.8 billion in five and a half years beginning next December 1.

Thus, UAL will conduct more massive furloughs down to 74,000 employees in 2004 compared to 84,000 workers laboring now for the company and a staff of over 100,000 UAL had before the 9/11 terrorist attacks, Mr. Tilton explained.

United Airlines will bring down transport capabilities by roughly 6 percent in 2003 compared to the ongoing year, for a 23 percent decline since 9/11.

In addition to the announced decrease in the number of flights, the company will slash 49 supplementary aircraft off its fleet. Furthermore, the U.S. air carrier plans to hold back all plane deliveries until 2005. This means only 25 aircraft off this backlog will be delivered between 2007 and 2009.