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Airlines Plan Furloughs; Air New Zealand Sees Smaller Carrier In A Year

Published on Mar 31 2020 12:14 PM in General Industry tagged: Air New Zealand

Airlines Plan Furloughs; Air New Zealand Sees Smaller Carrier In A Year

A number of major global airlines have projected layoffs, furloughs and capacity cuts over the next few months due to the coronavirus pandemic.

Airlines have been rushing to shore up liquidity, reduce capital expenditure and cut costs to stay afloat amid the COVID-19 crisis.

Global travel data provider OAG said that the aviation industry is now less than half the size that it was in mid-January due to rapid capacity cuts implemented by airlines around the world.

Approximately 40% of the world's passenger jet fleet is now in storage, according to data from aviation firm Cirium.

Air New Zealand

Air New Zealand has said that it will lay off approximately 3,500 employees, which is nearly a third of its workforce, in the coming months, as the COVID-19 crisis has forced it to cancel nearly all of its flights.

The virus "has seen [Air New Zealand] go from having revenue of $5.8 billion to what is shaping up to be less than $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% smaller than we are today."

New Zealand's national carrier, which employs 12,500 people, warned that the layoffs estimate is a "conservative" assumption and that the numbers could rise if the domestic lockdown and border restrictions are extended.

Air Canada

Air Canada has said that it will cut second-quarter capacity by 85%-90%, place approximately 15,200 unionised employees off duty and furlough approximately 1,300 managers beginning on or about April 3.

Canada's largest airline said that it is drawing down approximately C$1 billion ($706 million) in credit to bolster liquidity, while senior executives will forgo between 25%-50% of their salary and board members have agreed to a 25% cut.

Spirit Airlines

Low-cost US carrier Spirit Airlines Inc is cancelling all flights to and from the New York region after US officials warned against travel to the area because of the pandemic.

Lufthansa, easyJet And flydubai

Germany's Lufthansa said that 27,000 of its staff will reduce hours, while Britain's easyJet said that it will lay off 4,000 UK-based cabin crew for two months, and low-cost carrier flydubai said that it will reduce staff pay for three months.

Pushing The Treasury

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

The $2.2 trillion stimulus and assistance legislation signed into law last week by President Donald Trump gives passenger airlines $25 billion in cash assistance to cover payroll costs and $25 billion in loans, while cargo carriers are eligible for $4 billion in grants and $4 billion in loans.

Treasury said that airlines should apply for grants by April 3.

American Airlines

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

"We certainly hope and expect that by that time, the virus will be contained, Americans will be flying again and we will be back to flying a full schedule," chief executive Doug Parker and president Robert Isom said in the memo.

Virgin Australia

In Australia, Virgin Australia Holdings Ltd has said that it is seeking a possible government loan of A$1.4 billion ($864 million), 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 Ltd, Etihad Airways and Chinese conglomerate HNA Group, that have also seen a sharp deterioration in revenues.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition. 

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