SG News (Straits Times)

Coronavirus: Airlines taking drastic steps to stay afloat

By June 22, 2020 No Comments
Travellers wearing protective masks checking in at an Air Canada counter in Toronto last month. Air Canada has announced it will cut capacity by up to 90 per cent in the next quarter and temporarily reduce its workforce by about 16,500 to cut costs.

Travellers wearing protective masks checking in at an Air Canada counter in Toronto last month. Air Canada has announced it will cut capacity by up to 90 per cent in the next quarter and temporarily reduce its workforce by about 16,500 to cut costs.

TORONTO • More major global airlines announced drastic measures to stay afloat during the coronavirus crisis, with Air Canada announcing it will cut capacity by as much as 90 per cent next quarter and temporarily reduce its workforce by about 16,500 to cut costs.

Its decision, effective on or around April 3, puts 15,200 unionised employees on “off-duty status” while 1,300 managers will also be furloughed, it said on Monday. The company said the cuts were required due to the “dramatically smaller operations” resulting from travel restrictions worldwide.

“It will help ensure that Air Canada can manage through this crisis that is affecting airlines everywhere,” its chief executive officer Calin Rovinescu said. The reductions, along with other measures, “will position us to restore regular operations as soon as the situation improves”.

Canada has pledged to craft an aid package for its airline industry, which like peers worldwide has severely curtailed flights in the fight to stop the Covid-19 spread. Prime Minister Justin Trudeau has yet to indicate what form it will take.

Air Canada said it will draw down its operating lines of credit of about C$1 billion (S$1 billion), and Mr Rovinescu and chief financial officer Michael Rousseau will forgo their salary, while senior executives and board members will take a pay cut.

Air New Zealand said yesterday it will lay off about 3,500 employees, nearly a third of its workforce, in the coming months, as the outbreak forced it to cancel nearly all flights.

The virus “has seen us go from having revenue of US$5.8 billion (S$8.3 billion) to what is shaping up to be less than US$500 million annually”, CEO Greg Foran told staff in an e-mail. “We expect that even in a year’s time, we will be at least 30 per cent smaller than we are today.”

New Zealand’s national carrier, which employs 12,500, said the layoffs estimate was a “conservative” assumption and the numbers could rise if the domestic lockdown and border restrictions were extended.

US airlines have been pushing the Treasury to release up to US$58 billion in government grants and loans and threatened to start laying off tens of thousands of workers within days if they did not get a bailout.

American Airlines Holdings intends to apply for up to US$12 billion government aid, ensuring no involuntary layoffs or pay cuts in the next six months, executives said in a memo to employees.

Dubai’s Crown Prince Sheikh Hamdan bin Mohammed said yesterday that the emirate’s government was committed to fully support Emirates airline and will inject fresh equity into the company.

Emirates has a “strategic importance to the Dubai and UAE economy and the airline (has a) key role in positioning Dubai as a major international aviation hub”, he said in a Twitter post.

Virgin Australia Holdings said it was seeking a possible government loan of A$1.4 billion (S$1.2 billion), which could convert to equity under certain circumstances to help it weather the coronavirus crisis.

Virgin’s shares are tightly controlled by foreign airlines including Singapore Airlines, Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenues.

BLOOMBERG, REUTERS

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