Caribbean Airlines downsizes due to COVID-19 losses
450 jobs to be retrenched as company seeks to restructureWednesday, June 23, 2021
Regional carrier Caribbean Airlines Limited (CAL) in its first quarter performance this year reported US$25.7 million or TT$172.7 million in losses — a 75 per cent downturn in revenues when compared to the corresponding period of last year.
Since the outbreak of the novel coronavirus pandemic last year, the airline has had to deal with severe financial fallouts which saw it incurring operating losses of over US$109 million. This, as the global travel industry continues to deal with additional pressure from imposed travel restrictions along with the ongoing restriction of operations at its Trinidad base.
“The announcement that the borders of Trinidad and Tobago may soon reopen is welcome news, but all forecast suggest that the recommencement of travel will not be in the same volumes as they were pre-COVID. Therefore, until air travel regains its pre-COVID momentum the airline will need to adjust its operations to cater for a reduced scale of demand after the opening of the borders,” CAL said in a news release this week.
The airline said that despite the impending reopening of borders, it does not expect passenger demand over the short term to recover sufficiently in order to support existing structures. Consequently, the company in a series of cost containment and strategic restructuring objective is moving to make its operation more viable and efficient. Among the measures cited by the entity are significant reductions to its human resources complement.
“In terms of employees, the airline has determined that 25 per cent of its workforce or about 450 positions throughout its network is surplus to its current needs. The company will embark on consultation with the employees and other stakeholders, with respect to treating with this surplus labour situation,” the release stated.
In an earlier attempt to save jobs and reduce its salary bill also, the company took steps which saw some of its employees being sent on no-pay leave, while some got salary cuts and another set laid off.
Outside of staff retrenchment, the company is also seeking to scale down some of its general airline operations, fleet size, assets and route networks. “As part of the streamlining strategy, the number of jets in the fleet will be reduced, for the time being, over the course of 2021. Its route network will also be adjusted to reflect the changing market.”
The company's CEO, Garvin Medera, assured customers that the changes would not significantly affect the quality of service, safety and customer service to be provided.
The company in which the Jamaican Government has a 16 per cent stake has fleet comprising some six ATR 72-600s and ten Boeing 737-800s and a network which spans across 18 destinations in South America, the Caribbean, the United States and Canada.
CAL, in its latest financials, said that while it was able to reduce expenses by as much as 52 per cent during the first quarter period, the continued impact of the pandemic on the travel and tourism industry has caused the airline to see the constant plummeting of passenger numbers and flights to less than 10 per cent of its normal activity. It said that while subsidies of over US$100 million were injected by the Government of Trinidad to keep the airline afloat, this was still not enough to counter recurring losses.
“We made major changes that substantially reduced our costs and kept the airline operational, but the situation now requires us to take further steps to ensure that CAL has a sustainable model for 2021 and beyond,” Medera said.
Prior to the outbreak of the pandemic in 2020, CAL had a two-year streak in profits earning US$4 million and US$11 million in 2018 and 2019, respectively. Since last year, the entity's operating loss has, however, significantly grown to TT$738 million (US$190 million) as the airline transported approximately 1.8 million less passengers than it did in the previous year.
Recent data from the United Nation's International Civil Aviation Organization (ICAO) confirm the drastic fall in international air travel due to COVID-19 by about 60 per cent since last year — levels last seen in 2003. The entity said that just about 1.8 billion passengers took flights in 2020 when compared to 4.5 billion in the previous year.
“That adds up to a staggering financial loss to the industry of around $370 billion, with airports and air navigation services providers losing a further $115 billion and $13 billion, respectively,” the ICAO further said in its report.
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