Past: Corona Virus Updates – All Board Statements

As we all continue to work through the most difficult year in our industry in years, we want to take this opportunity to thank all of our valued employees for their hard work. We could not do what we do without you. To show our gratitude, we are happy to announce that in recognition of your dedication throughout the course of the ongoing COVID-19 pandemic, LSG Sky Chefs senior leadership has approved a $2.00 per hour retroactive Temporary Incentive Pay (TIP) payment for all our hourly staff.

The retro payment will reflect all active hours worked, including Regular, Overtime, and Double Time active hours, between the dates of January 29, 2021 and March 4, 2021.  You will be receiving a similar message from your union representative, as LSG Sky Chefs and UNITE HERE International continue moving forward in a collaborative effort for you.

The TIP retroactive payment will be distributed to all eligible Union employees on April 15, 2021 and on April 22, 2021 for our non-Union hourly staff via their regular payment method.

Again, from the LSG Group Americas Board, our sincere thanks.

Statement from the LSG Group North America Board
April 13, 2021

As many of you know, Sky Chefs, Inc. submitted its application for payroll support under the airline contractor section of the CARES Act to the U.S. Department of Treasury on April 3. Last Friday, May 15, we received feedback from the government, affirming the company’s eligibility for government funds in the form of a term sheet, however, at a lower amount and in a combination of loans and grants. 

As with most federal aids, the Treasury’s proposal contains a number of terms and conditions that, together with the loan/grant at a lower amount, are currently being evaluated by the NAM Board, in collaboration with the functional leaders of various departments. Based on the way this is packaged, it will also require approval from the LSG Group Supervisory Board. All of this will take some time, but we do consider the term sheet we received as a massive step forward, and we will keep all of you posted on the progress and next steps.

Federal aid under the CARES Act is limited to payroll support only, which is applicable exclusively to provide salaries, wages and benefits for employees, and it is available for a limited amount of time. It does not solve for the long-term challenges that we continue to face. Like most companies, our cash reserves have taken a significant hit, and while federal payroll support would certainly buy us some needed time, we will ultimately be adding more debt to our bottom line. It also does not take away the fact that the future of our business in the mid and long-term looks very different; adjustments for a ‘new normal’ will be necessary.

On behalf of the LSG Group, we are incredibly thankful for your continued efforts in keeping our colleagues and our loved ones safe and healthy. While we understand the hardship today’s pandemic presents on you and your families, we remain hopeful that together, with the help of our colleagues, we can look forward to a better future for the LSG Group.

Statement from the LSG Group North America Board
May 27, 2020

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

In our update last week, we shared with you our continued efforts to further understand the parameters surrounding the recent bill passed by the U.S. Senate. Since that communication, there have been a number of developments that we would like to share with you in terms of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Here are a few updates on what transpired last week regarding the CARES Act:

• We have confirmed that as an airline caterer, we are effectively categorized as an airline contractor, earning us the qualification to apply for government financial aid under the CARES Act, given cooperation of a number of stipulations, including:

a. Our qualification to receive government funds would be contingent upon the company refraining from conducting involuntary layoffs or furloughs, or reducing pay rates and benefits until September 30, 2020; and

b. Meeting the government’s April 3, 2020, deadline to submit a formal application (which was met accordingly).

Our internal crisis team continues to work with our CSCs to enforce proactive safety measures. Hand-washing and social distancing remain our best lines of defense against today’s pandemic, and all units continue to enforce a culture of heightened safety. Employee health and safety remain the paramount priority, and additional new measures are being implemented frequently in accordance with CDC and local government guidelines.

On behalf of the LSG Group leadership team, thank you again for your unwavering support during this time. It is this time that each of our contributions become more critical to maintain business continuity; thank you for your discipline and ongoing commitment.

Statement from the LSG Group North America Board
April 8, 2020

As many of you know, last week, the US government signed into law a $2 trillion emergency aid bill. These developments prompted a series of questions as they relate to the LSG Group (“LSG”) North America (“NAM”) region: would LSG NAM be considered a qualified company under this bill? Would LSG be categorized as an organization within the airline industry, and thus, be qualified for the airline bailout stimulus bill? If the answer is yes to all of the above, what is our strategy to ensure LSG obtains government monetary relief? When can we anticipate receiving financial grants and/or loans? And how does this impact LSG NAM’s response to the significant volume downturn?

Our honest answer right now is: we don’t know yet. What we do know now is that within the aid bill, money is allocated to airline contractors and that airline caterers are specifically mentioned. But the guidelines and procedures to obtain grants are still being written, and while we are in close contact with lobbyists and lawyers, it is too early to tell how this will work out.

The decisions we have to make carry long-term impacts that could potentially affect the lives of thousands of colleagues and their families. It is more critical than ever that we make clear, informed decisions. Our core value in protecting both our employees and our company is non-negotiable; it is for this reason that we are making every effort to ensure we are methodical and precise in every decision we make. This will take some time. We simply cannot commit to something where we do not yet have all of the relevant facts in its entirety.  Considering the magnitude and severity of COVID-19’s impact on the airline industry, we simply don’t have a margin for error right now.

Over the next days, each of us will delve further into the options that are available to us to determine our next steps. While we work to identify alternative business opportunities to compensate for revenue loss, they will also proactively track the ongoing developments of our customers to assess these impacts on our CSC flight volumes. Dave continues working with Operations leaders, as well as the RPCC (Regional Pandemic Crisis Committee), to mitigate the effects of COVID-19 in our CSCs. Finally, we continue to work with Legal, Finance and HR experts to establish a full scope of the financial aid options available.

As we continue to assess and evaluate our next steps, we thank you for your ongoing support. We have received an influx of questions from many of you, and we remain committed to ensure we address each individual question (in time). We remain dedicated to providing you with updates on developments and decisions that are made over the next coming weeks. Thank you again on behalf of the LSG Group NAM leadership team.

Statement from the LSG Group North America Board
March 30, 2020

As we continue to closely and constantly monitor the ongoing developments of COVID-19, we, as a service provider to the airline and retail industries, continue to feel both the operational and financial impacts of this global epidemic. In an effort to safeguard our organization and our viability as an employer, we have implemented a number of cost-saving measures to fend against these adversities. Just as we have established preventive measures to safeguard personal health, we are called to do the same for our financial health.

We continue to take a realistic view at today’s situation. This crisis is unprecedented, and we are forced to think far beyond past crisis scenarios. These circumstances are testing the strength of our company in ways that no one has foreseen. Despite the challenges, we know that this won’t last forever. In China, life is getting back to normal, however slowly. We know that this will happen in the United States also, we just don’t know when. Today’s environment calls on each of us to roll up our sleeves and work together as one unified team, and we have seen colleagues do just that.

We have witnessed employees pulling together for the greater good of their colleagues and continuing to provide services to our customers where and if required. We have also seen many emails and phone calls coming in with suggestions, recommendations, requests for help and requests for further communication. We thank you for all your feedback and encourage you to keep this up. And regarding the last point on communication, as mentioned already above, we are committed to providing transparent and timely communications to you. This is still a rapidly-evolving situation with a strong focus on day-to-day management of the changes rather than mid to long-term planning. We are looking into other (cost-responsible) forms of communications like webcasts and or video updates, but for the moment, please keep your eyes open for updates through this email and text channel.

On behalf of the entire LSG Group leadership, we thank you for your commitment in these uncertain times. Getting through this requires a mindset of doing this together, and each of us plays a role in ensuring the sustainability of our business. We thank you for your relentless dedication in ensuring our operations continue moving forward.

Statement from the LSG Group North America Board
March 23, 2020