Air New Zealand is going to shorten its carriers

Tuesday, April 21, 2020

Major global airlines have projected layoffs, furloughs and capacity cuts over the next few months, with Air New Zealand warning it expected staffing levels to be 30% lower than it is now, due to the coronavirus pandemic.

Airlines have been rushing to shore up liquidity, reduce capital expenditure and cut costs to stay afloat amid the worst crisis to hit the global aviation industry.

Data firm OAG said the aviation industry was less than half the size it was in mid-January due to the rapid capacity cuts implemented by airlines around the world. Around 40% of the world’s passenger jet fleet is now in storage, according to data from aviation firm Cirium.

Air New Zealand said it will lay off about 3500 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 $5.8 billion to what is shaping up to be less than $500 million annually, chief executive officer Greg Foran told staff in an email to a media

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

Troubled airline Virgin Australia today confirmed it is in voluntary administration.  The decision comes as Virgin seeks financial assistance from a number of parties, including state and federal governments, to help it through the coronavirus crisis, however it is yet to secure the required support.

Air Canada will cut second-quarter capacity by 85%-90%, place about 15,200 unionised employees off duty and furlough about 1300 managers, beginning on or about April 3.

Canada’s largest airline said it is drawing down about $1Cbillion ($NZ1.1 billion) in credit to bolster liquidity, while senior executives will forgo between 25%-50% of their salary and board members agreed to a 25% cut.

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.

On Monday, Germany’s Lufthansa said 27,000 of its staff would reduce hours, Britain’s EasyJet PLC said it would lay off 4000 UK-based cabin crew for two months, and low-cost carrier flydubai said it would reduce staff pay for three months.

US airlines have been pushing the Treasury to release up to $US58 billion ($NZ96 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 $US2.2 trillion stimulus and assistance legislation signed into law last week by President Donald Trump gives passenger airlines $US25 billion in cash assistance to cover payroll costs and $US25 billion in loans, while cargo carriers are eligible for $US4 billion in grants and $US4 billion in loans.

Treasury said airlines should apply for grants by April 3.

American Airlines Holdings Inc intends to apply for up to $US12 billion 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.

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