As Airlines Battle for Survival

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The low passenger traffic and industrial disruptions are making it extremely difficult for the airlines to continue as going concerns, writes Chinedu Eze

When Nigerians airlines were pushing for the resumption of flight operations after the coronavirus lockdown, many of them knew that passenger traffic would be low, but there were others who were sanguine.

Practically the economy was still on lockdown when airlines resumed domestic flights. The hotels were still closed, most government offices were still closed, business were still low and few people were travelling. In the first three weeks, passenger traffic was put at 30-40 per cent.

After losing revenue for over four months and still spending money to maintain aircraft on storage, active personnel who were still working during the lockdown and acquiring kits and other facilities to meet covid-19 safety protocols, airlines were spending money without replenishing. That was why they yeaned for palliatives, which did not come. They needed financial support from government, but the signal for such help is dim.

So the airlines are struggling in the face of travellers’ apathy, high cost of operations and other obligations. For example, Nigeria’s biggest carrier, Air Peace operated over 120 flights before COVID-19 lockdown but that has come down to about 20. Yet it has workforce of over 3000 and multiple taxes that are not easing out. The airlines are all closer to the brink than when they started.

Labour

Beyond their projections, the airlines never thought that labour would constitute the major problem they would have upon resumption. This is because during the lockdown, many airlines in different parts of the world had reduced their workforce and airlines’ personnel understood that it was a perilous time; that Coronavirus has literally strangled the global economy so significant adjustments have to be made in order for the airlines to survive.

So currently, the demands of aviation workers, especially the pilots and engineers, poses a grave challenge to the survival of the airlines. While many airlines worldwide were getting laid off, local pilots are insisting on regular pay despite the obvious global economic meltdown that affected the aviation industry most.

Last week labour disrupted the operations of Bristow Helicopters and forced the company to lay off over 100 pilots and engineers. Earlier, in order to survive, Air Peace had decided to restructure its operations in the wake of new realities and eased out 69 pilots who could not agree with the inevitable change. They insisted on earning the same salary they were earning post-COVID-19.

On Monday, labour had issued a statement that it would picket the operations of Arik Air on August 17, 2020. The National Union of Air Transport Employees (NUATE) and the Air Transport Senior Staff Services Association of Nigeria (ATSSSAN) said barring any last minute changes to the status quo, the unions in a notice to all staff of Arik Air signed by NUATE General Secretary, Ocheme Aba and ATSSSAN Deputy General Secretary, Frances Akinjole maintained that the action would take place. The unions said they were miffed that there has been no payment of staff salaries in the airline since April after placing 90 per cent of the workforce on compulsory leave.

“Subsequent to the failure of Arik Air to address the issues raised in the 15-day ultimatum our unions issued to the airline since July 21, 2020 and realizing that the window of the 15-day came to an end on Wednesday, 5th August 2020, we are now left with no choice than to inform the management of Arik Air that there is going to be a total withdrawal of services from the airline as from the next seven days,” the unions said in the letter they wrote to the management of the airline.

Air Peace

The unions also threatened to disrupt Air Peace operations unless it recalled the pilots it laid off last week, insisting that both Air Peace and Bristow must recall the laid off workers.

But the Director of Flight Operations, Air Peace, Captain Victor Egonu spoke to THISDAY and explained the situation in the airline that prompted the lay off of the pilots.

He said that the airline had to embark on restructuring in order to survive the hard times. To this end, it had to cut workers’ salary from maximum of 40 per cent for very senior personnel and 30 for the middle income earners and 15 for the low income earners. Those who earn lower wages were left untouched. The salary cut was stipulated to last for only three months after which the airline would review operational climate and its own finances to take the next decision.

“Under the COVID-19 economic meltdown we want the airline to survive so there was salary cut by 40 per cent, some 30 per cent and some 15 per cent, just for three months. By then we will know where the industry is headed and we make changes. We have been the airline that is known to increase salaries.

“About three years ago we increased salary by 100 per cent because of the low value of the naira then. Six months after that we had another increase. Our pilots are the highest paid in Nigeria and our salary is competitive with the mega carriers of the world.

“The essence of the airline was to create jobs. That was the reason it was established and we have created over 3000 jobs in the last six years. We have trained over 80 pilots and engineers. This year was supposed to be explosive year for us in the positive sense, but COVID-19 disrupted that plan.

“But some people did not agree with our restructuring plan to survive; they wanted the airline go under instead of making necessary adjustments. They could not understand how an airline that was planning to expand by 100 per cent decided to cut operations by 50 per cent.

“We tried to explain to them as much as possible, but some people seemed to have made up their minds. But majority of the staff at all levels have bought our plan so we are working with them,” Egonu said.

Surviving the Airline

Egonu said that the management of Air Peace cannot sacrifice the existence of the airline and the loss of 3000 workers in order to please the few pilots that disagreed with the airline’s restructuring plan, adding that other companies that have businesses with nation’s biggest carrier are over 3000. These also would lose their means of livelihood if the airline goes under.

“We cannot put the workforce back to where they were in January after the Coronavirus pandemic. Every airline around the world is laying off staff.

British Airways, KLM, Etihad recently and so many others. Since we started operation we have never delayed the payment of salary to another month. But now, we cannot promise what we cannot deliver and then sacrifice the airline.

“The average salary is N3.6 million monthly for captains. Some of them earn N4 million. We said, we give you base of about N2.2 million, which is 60 per cent of what you were earning before for 90 days and after we sit down and review it.

“Even with this adjustment, Air Peace salary is one of the best, if not the best. What is important is what we can pay you and the airline survives. The aviation industry is very sensitive because it deals with human lives. We cannot work with those who are not happy. We work with the people who believe in what we want to do,” Egonu said.

Anger

Some industry workers were peeved with the agitation of the labour unions over personnel issues with the airlines. But the unions had argued that some of the issues they were agitating for preceded the COVID-19 lockdown, but the industry observers said that whatever that was under discussion that concerned finances before the lockdown should not even be raised because airlines are financially in the worse situation after the lockdown.

The Secretary of Aviation Round Table (ART) a think-tank group in the industry and former Commandant of Murtala Muhammed International Airport, Lagos, Group Captain John Ojikutu (retd), warned the unions that their attack and campaign against the airlines might force some of the operators to go under.

“Hope these unions know where we are; where the Nigeria civil aviation is right now compared to where those of the developed countries are; even where contemporary African countries are? We are at the edge of the cliff of a mountain. He, who has ears, let him hear.

“The lockdown of operations by unions is another reason why the flights will drop more or disappear from the sky. We never had anything near 25 per cent of what you find in Europe, Asia or America before now or pre COVID-19. What the unions are doing now in Nigeria is to kill the industry,” Ojikutu said.

Also industry stakeholder and consultant, Amos Akpan urged labour and airlines to reach amicable resolution over issues concerning personnel welfare so that the airline would be able to survive after the COVID-19 lockdown.

“Now we leave the real threat to the existence of our industry and engage in fights we don’t have control of how it will end; even as it is obvious it is an all losers’ fight. Workers will stop work, which means no operations, which translates to nil income. As businesses do not earn income, the unpaid fixed costs keep piling. Companies cannot meet obligations, redundancy sets in, and industry is in comatose.

“Some of the issues raised now were ongoing before COVID-19 set in. So using them now to cripple the operations is below the belt punch. We could be having ongoing discussions so that companies do not become bankrupt.

“Bankruptcy in Nigeria is not the same as it is in America or Europe. The company closes and does not resurrect like the proverbial Phoenix,” Akpan said.

State of Global Industry

By April, international carriers had started to reduce their workforce in recognition of the economic damage wrought by the COVID-19 pandemic.

Reports indicated then that Virgin Atlantic fired more than 3,000 personnel, including 600 pilots; Finnair returned 12 planes and laid off 2,400 people, while You grounded 22 planes and fired 4,100 people.

Ryanair also grounded 113 planes and got rid of 9,00 pilots for the moment and indications showed 450 would be sacked in the coming months, while Norwegian completely stopped its long-haul operations and the Boeing 787s it earlier leased have been returned to the lessors
In the same vein, SAS returned 14 planes and fired 520 pilots, but the Scandinavian states are studying a plan to liquidate Norwegian and SAS to rebuild a new company from their ashes

Also Ethiad had cancelled 18 orders for A350, grounded 10 A380 and 10 Boeing 787 and laid off 720 staff Emirates has grounded 38 A380s and cancelled all orders for the Boeing 777x (150 aircraft, the largest order for this type) and 56 members of the workforce may retire.

It is expected that governments and labour unions should do everything possible to enable airlines to survive because air transport remains the catalyst to economic development of every country.