Coronavirus: Future of airline industry in governments' hands

Lucy Harley-McKeown
·3 min read
25 September 2020, Saxony, Dresden: A frontal view of an Airbus A380 shortly after take-off flies over a lighting system at Dresden Airport. Photo: Tino Plunert/dpa-Zentralbild/ZB (Photo by Tino Plunert/picture alliance via Getty Images)
The Airbus COO said in an interview with Handelsblatt business daily that the 15,000 job cuts would be a minimum. Photo: Tino Plunert/picture alliance via Getty Images

The aviation industry outlook remains bleak, according to Airbus (AIR.PA) chief operating officer Michael Schoellhorn.

Rising coronavirus cases and new travel restrictions have crimped the sector’s recovery, and the company has said it needs to shed 15,000 posts worldwide, according to a report by Reuters.

As some sectors of the economy have enjoyed a modest rebound, air travel is still at a faction of normal levels. Airlines have delayed deliveries of new aircraft, further stalling Airbus’s business.

The COO said in an interview with Handelsblatt business daily that the 15,000 job cuts would be a minimum.

Last week Airbus said it was weighing reduced working time in production areas over the next two years as a means of reducing job casualties.

The move would act as a kind of furlough and preserve those with skills, according to Bloomberg.

Airbus is just one part of the industry struggling. Many other airlines have made difficult decisions in order to save their businesses, while trying to navigate the ever-changing landscape of government travel corridors.

The Dutch arm of Air France-KLM (AF.PA) also reached an agreement with its flight staff, excluding pilots, this week, to cut costs in return for state aid, the FNV trade union said on Thursday.

The union agreed to temporary wage cuts and increased severance payments for those that have lost their jobs in the impending reorganisation.

This was followed quickly by a bailout application from the Dutch government on Friday. If approved, the company would receive a €1bn ($1.2bn, £906m) loan and €2.4bn in guarantees for commercial loans.

In return for the government's support, KLM has to cut costs by about 15% and reduce emissions by 50% by 2030.

In July, KLM said it would cut another 1,500 jobs. This would mean a 20% reduction in staff from pre-pandemic levels. Alongside this, a pay hike agreed for 2020 was frozen.

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US airlines have also moved to lay off thousands of staff as federal relief tapers off.

Congress has continually delayed a new stimulus deal as Republicans and Democrats reached a stalemate on the terms. The layoffs turn up the heat on Treasury Secretary Steven Mnuchin and House of Representatives Speaker Nancy Pelosi. The pair have been trying to agree a followup package of stimulus for more than a month now.

American Airlines (AAL) said it would cut 19,000 workers while United Airlines (UAL) is due to lose 13,000, although both carriers said they are ready to save jobs if the government delivers more bailout cash.

United Airlines sent a message to its employees on Wednesday stating it had implored “elected leaders to reach a compromise, get a deal done now, and save jobs."

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In the UK, the story is much the same. Two weeks ago, British Airways confirmed it would cut 10,000 jobs, as it reached a deal in principle with unions.

As of two weeks ago the airline said it was operating at between 25% and 30% of its capacity.

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