In our last COVID-19 update, we shared with you a few terms of the CARES Act passed by the federal government and informed you that we had submitted an application to receive government funds from the U.S. Treasury Department in a timely fashion. Although initial contact with Treasury has been established, our application remains pending.
The impact we continue to observe in our CSCs is staggering: We have experienced a 73 percent decrease in total volume, and total meals produced are down by more than 94 percent throughout the North America (“NAM”) region. Last week, we made the difficult decision to temporarily cease operations out of our Salt Lake City International Airport (SLC) facility.
As you know, cost-saving measures have been implemented over the past several weeks: We have frozen all travel, narrowed our vendor programs to only those whose services are necessary for operations and implemented a range of programs, including involuntary leave of absence. We also continue to pursue non-airline business for production of meal kits and sandwiches as an alternative source of business.
And while these cost-cutting measures and business wins have aided our efforts to safeguard company cash, the combined impacts of continued loss of flight volumes and lack of government financial support have led us to no other choice but to further cut costs.
After careful thought, we are implementing the temporary unpaid Mandatory Emergency Interrupted Operational (“MEIO”) leave of absence for a broader range of our union employees and non-union employees. Human Resources (“HR”) Managers will contact employees impacted by the MEIO to discuss further details and answer questions. Impacted employees who have enrolled in health benefits will continue to receive full benefits, and LSG will subsidize the cost of benefit premiums.
In addition, we will implement the following measures related to non-union staff:
- A mandatory 10 percent wage cut
- A temporary stop of 401K contribution-matching
Lastly, we are continuing to evaluate the viability of CSCs to remain open in the current circumstances. Potential alternatives could include temporary suspension of day-to-day operations with or without minimal crew levels. The decisions we are making are not being made lightly, and in these cases, we are also closely aligning with our customers.
Although these are some of the toughest decisions to be made during this crisis so far, taking these steps will not only enable us to maintain health and insurance benefits coverage for employees, but also help to minimize short- and long-term financial repercussions. We hope to return employees placed on leave of absence to work as soon as possible. We will proactively and continuously evaluate the business developments, as well as the status of potential government support.
We realize that it is a very challenging time, which is why these decisions have been extremely difficult. We encourage you to keep supporting each other through these challenging times as we continue to hope for a brighter future together as a part of the LSG Group North America team. Please don’t hesitate to contact our HR team members with questions and remember that our Employee Assistance Program is on standby for all LSG NAM employees.
Statement from the LSG Group North America Board
April 21, 2020