With the aviation sector hit the hardest by the economic slowdown brought by the new coronavirus disease 2019, (COVID-19) pandemic, local airline operators cut costs to cope with the significant slowdown in travel given the government restrictions to control the spread of the virus.
AirAsia Philippines, a low-cost carrier unit of Malaysia’s AirAsia Berhard, announced over the weekend it will lay off this month 264 of its employees or about 12 percent of its current workforce of 2,200.
“ Despite all our efforts to curb the effects of the pandemic, AirAsia has made the difficult decision of reducing the company’s workforce, but has done everything to keep the number of affected employees to a minimum totalling 12 percent of all Filipino Allstars (name given to AirAsia employees),” the carrier said in a statement.
Last March, AirAsia Group announced a salary sacrifice ranging from 100 percent to 15 percent to help ensure it can ride out the prolonged period of extremely low travel demand and minimize the impact on their employees.
Philippines Airlines laid off 300 of its 6,087 employees last March.
Cebu Pacific has reduced its capital expenditure for the year from P28 billion to P13 billion as it focuses on reducing costs and preserving cash liquidity and flexibility.
Air Carrier Association of the Philippines composed of the three local carriers, PAL, Cebu Pacific and AirAsia said the airlines have incurred P8 billion losses per month during the suspension of its flights starting March 16 this year. The P8 billion is the average aggregate fixed cost spent on aircraft lease, rentals, amortization, loans, salaries and wages.
Last week, local airlines started to gradually resume operations but flights are limited due to restrictions on leisure travel.
Cebu Pacific will resume flights to 20 domestic destinations from June 8 to 30.
PAL is back on 27 international destinations and 24 domestic routes while AirAsia resumed operation in nine domestic destinations on June 5 and is expected to mount international flights by next month.
International Air Transport Association earlier said the impact of COVID-19 in the Philippines aviation sector would result to potential revenue loss of $4.5 billion and over 500,000 job reduction. (M. Iglesias)