State-owned carrier, Caribbean Airlines has announced cost-cutting measures that will include the temporary trimming of staff by 33 per cent and the reduction of salaries, as the airline struggles with profitability due to closed borders.
The announcement was made via a news release issued by the airline yesterday.
It announced that in the coming weeks, the airline will cut the salaries of employees being paid more than $7,500 per month. The salary cuts will last for a period of eight months beginning mid-October.
The airline said the reductions will be “tiered to be higher for those on higher remuneration.”
The second measure announced by Caribbean Airlines was “temporary layoffs for approximately one-third of employees for three months, depending on their role and the current needs of the business.”
Thirdly, the airline said it was implementing continued cost reductions wherever possible, including reducing contractors and temporary workers and allowances that are not relevant at this time.
“The airline confirms that standard industrial relations criteria were used to select the employees who will be temporarily laid off. The leadership team recognizes the impact of these measures on its employees and their dependents and has put systems in place to support those affected,” the airline said.
The airline has added that its current operations are not impacted by the temporary layoffs.
“This includes our Cargo operations, the domestic Air Bridge between Trinidad and Tobago, the Kingston and Barbados based commercial services and special Government approved flights to/from Trinidad and Tobago,” the airline said.
Caribbean Airlines said that the temporary measures are to support the recovery of the airline. It said that reduced demand due to the global pandemic has presented significant challenges to the airline’s revenue and cash position and it must now take further steps to streamline expenses and its manage cash.
The statement said that the decision was made after careful consideration, discussions with key stakeholders and with the support of the Board of Directors.
The new measures kick in on October 15, 2020.
In March, the government announced the closure of this country’s borders effective Sunday, March 22 to all incoming and outgoing international flights.
In the six months since then, Caribbean Airlines has only been able to operate domestic flights between Trinidad and Tobago, as well as cargo flights.
It has been chartered on some occasions to take and bring nationals to and from Caribbean countries and the United States.
Intra-regional flights have also been stymied as other Caribbean nations although closed their borders but the airline has been able to operate a Jamaica to Barbados service after those nations reopened borders.
Although the airline’s losses for this year have not yet been released, the figures are expected to drastically contrast to last year’s.
For this same period last year – January to September – unaudited financial results showed earnings before taxes at $121 million, which included $153 million on international and other operations and negative $32 million on the domestic airbridge.
The airline had also reported increases in cargo revenue by 14 per cent and year on year profit by 34 per cent.
Revenue for the nine months was $2.3 billion, up 3.8 per cent over 2018, which the airline had attributed to the implementation of new technology, expansion of the airline’s route network, an increase in passenger demand and cargo business together with enhanced cost management.
The airline had made US$4 million in profit in 2018 but lost roughly US$600 million in the previous eight years.
The losses were
2010 – US$61 million
2011 – US$87 million
2012 – US$196 million
2013 – $US$70 million
2014 – US$62 million
2015 – US$39 million
2016 – US$82 million
2017 – US$24 million
While the domestic airbridge is currently open, COVID-19 restrictions only allow for persons deemed essential personnel to travel.
As a result, the airline has reduced the number of flights between Trinidad and Tobago.
Major cuts by other airlines
Caribbean Airlines is far from unique to the impact of COVID-19 on the industry.
In early September United Airlines, which operates a service between this country and the US, announced that it was cutting more than 16,000 jobs in October, after federal coronavirus aid that protects aviation jobs runs out.
American Airlines which also operates out of T&T announced in August that it will cut 19,000 employees in October when federal aid that protected those jobs expires and as the coronavirus pandemic continues to devastate travel demand.
Across the globe, Singapore Airlines said it would cut 4,300 positions, or around 20 per cent of its staff, due to the debilitating impact of the coronavirus pandemic on demand in the largest job losses in its history.
Earlier this year, British Airways cut 12,000 jobs, Emirates 30,000, Virgin Atlantic, 3,150 and Lufthansa, 70,000.