May 12, 2021

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Covid-19 Assails Airlines Worldwide: Air Peace, B.A., Cathay Pacific, KLM, others opted to downsize

6 min read

Alexandre de Juniac, Director General and CEO, IATA

As the devastating effect of COVID-19 on the airlines operations continue to bear its fangs on their balance sheets; airlines from Asia to Europe, U.S. to Africa and the Middle East, have all been groaning under the heavy yoke the pandemic fostered on aviation, tourism, and hospitality. Hence, individual airlines have begun threading on various diverse paths believed will help hasten their recovery.

The factual but grim pronouncement by the International Air Transport Association, IATA, that before operations of the airlines could return to the pre covid-19 era, which was the last quarter of 2019, will likely drag to about 2024. This has unnerved nearly all stakeholders in the entire air travel value chain.

In Nigeria, the reopening of the air space is barely four weeks and the airlines are already finding it hard to achieve forty percent load factor, this surely is pushing back recovery time for the investment incurred before securing the approval of the Nigerian Civil Aviation Authority, NCAA, for the restart to be possible.

The challenge in the entire process was no doubt cumbersome and capital intensive. The Pilots, Cabin crew and the ground staff had to do various refresher courses in lieu of simulation in other to be acquainted with all it takes to safely function in the novel pre-flight and even in-flight paraphernalia now dubbed, the new normal.

Pilots that had not flew since March to June, ditto for the Cabin crew, were made to undergo various refresher courses online and produce evidence of training to the regulatory authority before they were granted approval to return to service. Apart from cost of training and the renewal of their various licenses, the airlines under the new dispensation were mandated to provide Personal Protective Equipment, PPE, for all their personnel. And where a passenger does not have mask, the airline will be under compulsion to provide face mask for its passengers. All these were additional expense to the operating cost. The cost of bringing back the parked aircraft to service is also substantial.

Having fulfilled all these requirements, the airlines had anticipated steady increase of passengers so as to recoup those investments in a reasonable time frame. Alas, the environment. Most nations are still locked down and in Nigeria where interstate travel is still restricted, movement of people is no doubt hindered. The incidence of COVID-19 infection which, the government says is presently at the community level, does not encourage air travel. And even any form of travel unless the trip becomes exceedingly essential.

Within the airlines now, both the management and staff are at their wits end so as to have a win-win situation at the full of time. Workers must be pragmatic and considerate of their employers’ investment. While the management should also be humane in dealings with their workforce especially when negotiating on how each of the parties will weather the storm occasioned by the COVID-19 pandemic.

AIR PEACE

The leading airline in Nigeria nay ECOWAS, today sacked about 75 Pilots due to the very low passenger traffic and the ultra-high operating cost. The national economy does not also give cause to cheer as the naira maintains a steady slide against the US Dollar.

Others to be involved in the layoff that is said to be ongoing are Cabin crew, Engineers, Ground staff and Admin and HR staff. While those workers retained have had their salaries cut by 40%.

However, the truth is. Air Peace is not alone in this route.

BRITISH AIRWAYS

The UK flag carrier, British Airways, had earlier talked tuff that it will fire its entire 4300 Pilots and review the engagement rule before it rehires a paltry number to commensurate with its current low level of operation.

After several stalemated meetings by B.A. management with the British Airways Pilots Association, BALPA, just this weekend, a truce was reached by the management with the Pilots. The massive sack was averted but pay cut which was reluctantly agreed to by the Pilots union.

British Airways Management and its Pilots agreed to a 20% pay cut which takes immediate effect, and will subsist for not more than two years. While on the completion of two years the pay cut will further be reduced to 8%. And when traffic rebounds to what obtained in the pre-COVID-19 era, the 8% cut shall also be abolished.

The General Secretary of the BALPA, Brian Strutton, said although he was not satisfied with the outcome of the negotiation but it was the best he could get. He added that the negotiation had averted mass sack that was planned by the management.

Strutton said the union had averted the loss of 4300 jobs. He also disclosed that by the management’s plan prior to the truce, when the management would be rehiring after the sack, there would have been 1,250 permanent job losses and those to be rehired would have been engaged under a tenuous contract arrangement.

The scribe of BALPA sadly noted that there is still about 270 compulsory redundancies which would be gradually reabsorbed as travel rebounds and as other intervention programs gel.

 KLM

The Dutch national carrier, KLM, over the weekend announced through its Chairman, Pieter Elbers, that about 15% of its 33,000 strong workforce will have to be relieved of their jobs.

He said the airline was at the threshold of an uncertain road to recovery which could even get over 5000 of its work force off its payroll as a means to shed the burden that the operating environment presently cannot support.

The KLM President, Pieter, said the 3.4billion, about USD4.03b stimulus recently released by the Dutch government will merely take the airline through few months and as such, about 5000 persons will gradually be relieved of their jobs from now till 2021.  He added that the road to recovery is long and fraught with uncertainties.

 Pieter explained the structure that the gradual disengagement would take as follows, that all contracts expiring between now until the end of 2021 will not be renewed. He said about 1,500 temporary contracts will be affected. He explained that from the voluntary redundancy scheme introduced, about 2000 personnel will also be relieved of their jobs. He added that another 500 workers will be relieved of their positions through natural attritions such as retirement.

The KLM Group President, further itemized the casualties from downsizing in coping until passenger traffic improves as;

** involuntary layoffs- 1,500 staff. ** Ground staff to fire- 500.

** Cabin crew- 300. ** Cockpit crew- 300. ** Admin and other support staff- 400

 According to Dutchnews.nl, the spokesperson for the Cabin crew union said, the union will carefully study the downsizing to establish if the number of jobs match the management’s expected shrink in company operations.

KLM Operating result for the second quarter revealed it merely achieved 15% of its usual flights. By end of July it recorded 30% of its usual flights. The load factor in its domestic, regional and international operations with KLM-Air France, is yet to record 40% of its pre covid-19 operation. This is the crux of the matter for all the airlines.

 CATHAY PACIFIC

 Another scenario in Asia is that of the Hong Kong flag carrier, Cathay Pacific Airways which had announced its resolve to downsize to commensurate with the low passenger volume. And to reduce cost in the medium term

The airline in its official twitter handle said the management had offered voluntary retirement scheme to Pilots who are approaching retirement age to leave ahead of their due date.

The management urged Pilots who are aged 50 and above with their contract stipulating retirement at age 55, to turn in their retirement letter. While those aged 55 and above but whose contract stipulated retirement at 65, had also been called upon to turn in their retirement letter, so directed by Management of Cathay Pacific Airways. The directive said Pilots aged 58 and above who are in its regional arm, Cathay Dragon, are also eligible.

According to the airline, “the scheme will pay pilots who retire early, three Months basic salary for each year remaining before their normal retirement age, plus a further one Month allowance payment up to a maximum of 12 months’ basic salary”.

 The airline futher explained that, “the scheme will pay pilots who retire early three months basic salary for each year remaining before their normal retirement age, plus a further one month allowance payment up to a maximum of 12 months’ basic salary”.

 In Cathay Pacific’s half year operating result, (January-June 2020) it reported a loss of HK$9.9 billion which is USD 1.28 billion, including impairment charges on 16 planes, for the months ending 30th June, 2020.

 However, there is no iota of doubt that similar fate befalls our domestic operators. But the challenge from the very low passenger traffic is a cause for concern. Hence the Federal government had severally been called upon to make good its pledge to industry operators in the Nigeria’s space.

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