T&T | CAL reports US$25M loss, May retrench 25% of workforce....
PORT-OF-SPAIN, Trinidad and Tobago, June 21, 2021 - As the Regional carrier, Caribbean Airlines continues to claw its way out of its financial quagmire occasioned by the COVID-19 pandemic, the airline has announced a strategic restructure which is expected to affect 25% of its workforce as well as a decrease in the size of its fleet.
“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.
In terms of employees, the airline has determined that 25% 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,” CAL said in a statement on Monday.
“In order to survive in the short to medium term, the company has to decrease the aircraft fleet to match reduced passenger demand among other initiatives. The decrease in the aircraft fleet will result in surplus labour. Surplus labour is the reason for the proposed retrenchment exercise,” it explained.
It explained further that the steps are necessary to ensure it has a sustainable business model for 2021 and beyond. “These steps include major cost reductions in all areas of the airline’s operations, specifically its human resource complement, its fleet and other assets, and its route network,” it said.
The Trinidad and Tobago state run airline, (with a minority stake of 16% by Jamaica), announced today that during the first quarter of 2021 it recorded losses of 172.7 million Trinidadian dollars (USD 25.7 million), even after having made progress in the last year in structural changes to reduce costs by 52%. This represents a 75% decline in revenue, compared to the same period in 2020.
Among this reductions were the eight-month salary reduction for personnel with salaries above TTD 7,500 per month, with proportionally higher percentages in those with higher salaries; the temporary suspension of about a third of its 1,700 employees for three months (then extended until April 2021); and the elimination of suppliers and temporary workers, as well as other irrelevant expenses.
TT$738m (US$109.2m) compared to operating profits for 2018 and 2019. Since the beginning of the COVID-19 pandemic and the suspension of operations at its base in Trinidad and Tobago, the airline has seen passenger numbers plummet, and flight numbers reduced to less than 10% of normal operations,” the airline explained.
It said despite the growing challenges, the airline continued to offer services on many of its routes and provided invaluable repatriation flights for Caribbean citizens. However, given the financial impact of the pandemic, it proactively reduced costs. CAL’s first quarter (2021) expenses are down by 52% compared to the same period in 2020.
Further, the airline was kept afloat through a government guaranteed loan and a cash injection by the Government of Trinidad and Tobago totalling US$100 million.
“The announcement that the borders of Trinidad and Tobago may soon reopen is welcome news, but all forecasts suggest that the recommencement of travel will not be in the same volumes as they were pre-COVID,” CAL said.
It said 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. “Put simply, passenger demand in the short to medium term is not going to recover sufficiently to support the existing company structure after the reopening of the borders,” it concluded.