Caribbean Airlines (BW, Port of Spain) is to save USD1.6 million a month by furloughing 33% of its employees and slashing salaries for eight months as it tightens operations in the wake of COVID-linked reduced travel demand.
The state-owned flag carrier of Trinidad and Tobago said in a statement the temporary measures formed part of its business recovery plan in terms of which it must preserve cash and achieve cost reductions that reflect its changed revenue position. “These temporary measures represent the best way that we can achieve this. The alternative, if we do not achieve our target cost reduction, would be to consider other measures that may lead to permanent separations,” the airline warned.
For three months from October 15, 2020, the carrier will temporarily lay off more than 500 of its 1,600 employees across its entire network. For eight months from the same date, it will also reduce the salaries for those paid more than USD7,500 per month, with more reductions for those on higher salaries. Pension benefits and medical plans would not be affected. Employees would be recalled to work in their original posts as needed and based on job function and seniority, the airline said.
The Trinidad Express reported that salaries would be cut by 15% to 20%. It said the most immediate impact would be felt by the company’s 250 pilots and 375 flight attendants. It added that Caribbean Airlines had proposed to place contract pilots older than 60 on unpaid leave from October to December 2020, but that this was opposed by the Trinidad and Tobago Airline Pilots Association (TTALPA).
Meanwhile, the airline said it would further cut costs wherever possible, including reducing contractors, temporary workers and unwarranted allowances.
It said the temporary layoffs would not impact on its current operations, including cargo; a domestic air bridge between Port of Spain and Tobago; nor on Kingston Norman Manley and Bridgetown-based commercial services; and special government approved flights to/from Trinidad and Tobago.
However, news reports said Caribbean Airlines' cargo operations were generating minimal income and loads on Caribbean flights were low, with load factors not expected to recover to 85% until 2024.
Caribbean Airlines is headquartered in Port of Spain, with an operational base in Kingston Norman Manley. It operates to 22 destinations in the Caribbean, North- and South America. According to the ch-aviation fleets module, its fleet is comprised of twelve B737-800s and seven ATR72-600s. Leases for aircraft have been negotiated where possible, according to notes from a September 16 meeting between the airline’s management and the TTALPA pilots’ union. The carrier would still take ownership of two additional ATR’s, according to the report of the meeting.
Since Trinidad and Tobago closed its borders on March 23, 2020, the airline had paid full salaries to all employees while operating on a restricted basis, reports said. From May the airline had drawn most of its funding from a USD65 million government-guaranteed loan, but in order to secure additional funding, must show that it was not solely reliant on the government.
While most Caribbean borders have reopened, Trinidad and Tobago’s border were expected to remain closed until January 2021. However, Caribbean Airlines has managed to expand its regional service by setting up hubs in Barbados and Jamaica and filling the gap left by LIAT (Antigua and Barbuda) (Antigua), which ceased operations in June 2020.
Last year, it released unaudited 2018 financial results showing a profit of USD42 million. While the airline recorded USD158 million in earnings before interest and tax on international routes, it made a loss of USD47 million on the airbridge. The company’s net income from international flights and other operations was USD109 million, while domestic airbridge operations made a net loss of USD67 million.
The last time Caribbean Airlines presented audited annual financial statements was in 2015 for its 2014 performance, when it recorded a USD60 million loss.
