Airlines will have to cut more jobs to preseve cash, Iata says

Airlines have to cut more jobs to lessen costs as travel demand remains muted in the wake of the coronavirus pandemic, based on the International Air Transport Association.

“To keep last year’s degree of labour productivity, measured by ASKs (available seat kilometres) per employee, employment would have to be cut 40 %. Further job losses or pay cuts will be necessary to bring unit labour costs right down to the cheapest point of recent years,” Iata’s director-general and leader Alexandre de Juniac said on Tuesday.

Most airlines around the world have either furloughed their personnel or cut jobs as revenues ground to a halt when flights across the world were grounded to stem the spread of the pandemic. Although international travel has resumed generally in most countries, demand remains weak therefore of quarantine measures and fears of infection.

Cathay Pacific Airways earlier this month announced that it will cut about 5,300 jobs located in Hong Kong and close its Cathay Dragon unit within a sweeping overhaul of the city’s flag carrier triggered by the halt in air travel as a result of coronavirus pandemic. American Airlines, United Airlines, British Airways, Lufthansa and several other carriers have all announced plans to cut a large number of jobs in recent months.

“The industry has to get smaller at least for the next 12 to 1 . 5 years given the much-reduced outlook for travel and income and there has to be some way of doing that without completely draining airlines of their cash reserves,” Brian Pearce, Iata's chief economist, said.

Global airlines are anticipated to burn through another $77 billion of profit the next half of 2020 as the decline in income outpaces cost savings and different government wage subsidy programmes expire.

The common carrier now has 8.5 months' worth of cash left for operations, Iata said within an online media conference earlier this month. In the next quarter of the year, airlines used up an estimated $51bn of cash reserves as the Covid-19 pandemic decimated flights demand.

Iata also urged governments to adopt Covid-19 testing prior to flight departures and lift travel restrictions such as for example quarantine measures that are hurting travel demand.

“We are discussing with several governments and we are also tinkering with some testing that's set up either by some airports or some of our members. We see experiments in France, in Germany, in Italy, UK and Canada, US and some other Asian and Middle East countries,” Mr de Juniac said.