Close to 600 employees at Caribbean Airlines (CAL) in Trinidad and Tobago and Jamaica will be temporarily laid off for three months.
The measure takes effect from October 15.
For staff members who continue to work, there will be salary reductions for eight months—from October 15 to June 15, 2021.
It’s the immediate impact of the airline’s move to cuts costs.
To this end, the company projects to save around US$1.6 million a month.
Employees will be recalled to work “as the business needs warrant and based on job function and seniority”, CAL said in a statement yesterday.
The company said it is applying these “temporary measures to support its recovery during the Covid-19 pandemic”.
Those measures will involve sending some employees on no-pay leave, some salary cuts and some temporary lay-offs.
The criteria is based on the principle of last in, first out “unless there was justifiable and reasonable operational considerations to do otherwise”.
The measures are:
1. Salary reductions for a period of eight months from mid-October for those paid more than $7,500 per month, with reductions tiered to be higher for those on higher remuneration.
2. Temporary lay-offs for approximately one-third of employees for three months, depending on their role and the current needs of the business. (CAL employs more than 1,700 people. Laying off one-third of employees is close to 600 staff members).
3. Continued cost reductions wherever possible, including reducing contractors and temporary workers and allowances that are not relevant at this time.
“Reduced demand due to the global pandemic has presented significant challenges to Caribbean Airlines revenue and cash position, and it must now take further steps to streamline expenses and manage cash.
“After careful consideration, discussions with key stakeholders and with the support of the board of directors, the company intends to implement certain temporary measures to cut costs and reduce overheads from October 15, 2020,” the company said.
CAL said it used standard industrial relations criteria to select the employees who will be temporarily laid off.
“The leadership team recognises the impact of these measures on its employees and their dependents, and has put systems in place to support those affected,” it said.
Chairman of CAL Shameer Ronnie Mohammed, said he deferred his fees for five months—from March to July—to ensure staff were paid.
Asked if the company’s board would also defer its fees given the circumstances, he told the Express: “Fees for State enterprises directors are determined by the (Government). Any decision to defer fees will be up to the individual director. At a personal level, I am committed to the reduction based on scale and range of the proposed plans.”
It’s a drastic turn for the airline, which recorded a profit of $42 million in 2019.
On the day that T&T recorded its first Covid-19 positive patient on March 12, CAL was set to rebrand its operations.
While it has continued to expand regionally, filling the gap left by LIAT, the demand for travel has been reduced drastically and T&T’s borders remain closed.
Meanwhile, the company has yet to make a decision on the US$7 million downpayment it made to lease 12 of Boeing’s Max 8 aircraft.
CAL observed that globally, airlines were experiencing unprecedented challenges caused by the Covid-19 pandemic as there continues to be a slump in demand and ongoing travel restrictions.
“The International Air Transport Association (IATA) is expecting airlines to lose around $84 billion in 2020, making it the worst financial year in the history of aviation,” it said.
CAL chief executive Garvin Medera, in an e-mail to customers yesterday, said Covid-19 has been devastating to airlines.
“As you are aware, the Covid-19 pandemic has had a devastating impact on airlines worldwide, and while our employees and management team have remained resilient, diminishing revenue has meant that our costs have outstripped our earnings.
“In order to secure the longer-term viability of the airline, effective October 15, 2020, we will implement some tough, short-term measures to help decrease our operating expenditure,” he said.
“While these temporary targeted measures are aimed at reducing costs, you can rest assured that they will not impact the quality of service, safety and customer care that we give to you.
“As a matter of fact, our current operations, including cargo, the domestic air bridge between Trinidad and Tobago, the Kingston and Barbados-based commercial services and special Government-approved flights to/from Trinidad and Tobago, will be unaffected.
“Caribbean Airlines is committed to its mandate to connect the people of the region, and in spite of the challenges caused by Covid-19, we will stay focused on our vision to be the airline of choice serving the Caribbean,” he said.
In May, CAL was given a US$65 million Government-guaranteed loan to pay salaries.
The airline is currently working with the Minister of Finance to provide options for revenue generation and cut costs.
In minutes of a Trinidad and Tobago Airline Pilots Association (TTALPA) board meeting with CAL vice-president of human resources Roger Berkeley on September 16, it was said that January 2021 was the earliest Trinidad’s borders could expect to be reopened, that leases for the aircraft have been negotiated where possible, that cargo is generating minimal revenue and the loads on the Caribbean flights have been quite low, the airline doesn’t expect to recover passenger loads of 85 per cent until 2024, and CAL will still take ownership of two additional ATR aircraft.
And if the situation doesn’t improve for CAL?
“We are working towards ensuring the long-term survival of the company, and in this regard must achieve cost reductions that reflect our 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,” CAL said.
CAL’s answers on staff layoffs
What does Caribbean Airlines mean by a temporary lay-off?
A temporary lay-off is a period of employer-initiated suspension of contracts due to no fault or misconduct by the employees but due to circumstances which are beyond the control of the employer.
Under industrial relations law in most jurisdictions, employers can lay off employees temporarily for up to 90 days, unless exceptional circumstances persist. The employer also has the right to recall workers at any time during the 90-day period. During this period, the salary payments of employees affected will be suspended.
Will these temporary measures impact the airline’s flight services and cargo operations?
No. These temporary measures will not affect current flight services and cargo operations. Cargo, the domestic air bridge between Trinidad and Tobago, the Kingston and Barbados commercial operations and special Government-approved flights to/from Trinidad and Tobago will not be affected.
How long will persons be temporarily laid off?
These measures are intended to be short term and will take effect from October 16, 2020, to January 2021 (90 days/three months).
By how much will salaries be reduced?
Salaries will be reduced on a tiered basis, depending on the salary level. Persons paid $7,500 or lower will not have their salaries reduced. Employees’ pension benefit and medical plan will not be affected.
When will the employees return to work?
Employees will be recalled to work as the business needs warrant and based on job function and seniority.
Will there be employee assistance (EAP) available for employees?
Yes. The company takes its duty of care seriously and has ensured that support is in place for persons needing assistance. There is also a hotline set up to handle any staff queries.
Will employees have to reapply for their position?
No. Employees will be recalled to work in their original positions as the business needs warrant.