State-owned Caribbean Airlines (CAL) has said its restructuring plans include sending home 450 workers, representing 25 per cent of the airline’s staff, after taking a major hit due to the economic fallout from the COVID-19 pandemic.
In a news release yesterday, the airline announced its unaudited financial results from the first quarter of 2021 showed the company had lost $172.7 million with a 75 per cent decline in revenue, as compared to the first quarter of 2020.
CAL said this loss follows an operating loss of $738 million in 2020 as the airline has been operating at less than ten per cent of its normal flight schedule.
With T&T’s borders closed since March 2020, in September 2020 the airline announced it would try to stem its losses by implementing salary cuts and sending some of its staff on no-pay leave.
This resulted in a first-quarter reduction in costs of 52 per cent as 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 release stated.
And although Prime Minister Dr Keith Rowley has announced the country’s borders will be reopened by mid-July, CAL said forecasters have predicted travel will not be in the same volume as they were pre-pandemic.
“Therefore, 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.”
Guardian Media was told the short-term represents a period of one to three years.
CAL said it now has to take further steps to ensure a sustainable business model in the future.
“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. 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.”
The company said the 450 positions have now been deemed surplus.
It promised to engage workers in consultation going forward.
Staff alerted via internal memo
In a separate memo sent to staff, CAL explained its “financial difficulty” in greater detail, stating the current losses were a drastic change from the profitable years of 2018 and 2019.
“Unfortunately, the cumulative financial impact has made our current position untenable as we remain wholly dependant on the Government of Trinidad and Tobago to fund continuing operations, with liabilities in excess of US$65 million despite a government-guaranteed loan and cash injection totalling US$100 million,” the memo said.
As for the retrenchment process, the company sought to assure employees that the organisational changes would be transparent and fair.
“This will be conducted in the course of the next month. Human Resources will be in touch with further details later today and will conduct ongoing information sessions and provide regular updates via the usual channels,” employees were told.
Message to customers
In a message from CAL’s chief executive officer, Garvin Medera, sent to customers via email, the company was not so blunt.
It included its losses for 2021 but said despite this, it had continued to offer services on many routes and ‘provided invaluable repatriation flights’ for Caribbean citizens.
Medera also said the company was set to make major changes but did not go into details of the 450 jobs that will be lost in the coming months.
The letter sought to assure customers that their CAL experience would not be affected.
“However, we wish to reassure you that these decisions will not impact our passenger and cargo services, nor will it affect the quality of service, safety and customer care that we give to you,” Medera wrote.
In an interview with Guardian Media, head of Corporate Communications at CAL, Dionne Ligoure said legal and industrial parameters will be applied to determine which employees will be sent home.
“For example last in first out all other things being equal…The important thing to note is that there is to be a process of consultation with employees,” Ligoure said.
She emphasised the reason behind the retrenchment, saying, “The announcement that the borders are to reopen soon is very welcome news, however, all forecasts suggest that even with the opening of the borders, passenger demand in the short to medium term is not going to recover in a manner that is sufficient enough to support the existing company structure.”
Unions, workers caught by surprise
The T&T Airline Pilots Association (TTALPA), which represents about 200 pilots with Caribbean Airlines, said it learnt of CAL’s intention to lay off 450 of its staff via the media release yesterday.
“We have as much information as the public has from the media release. The only additional information that we have is that they intend to reach out to TTALPA later this week to discuss any further intentions with us, being the recognised majority union for the pilots,” executive administrator Shelly Sadaphal said.
She declined to comment further, saying she had given all the information about the retrenchment exercise that she could.
Secretary-General of the Aviation Communication and Allied Workers Union (ACAWU), Peter Farmer was much more vocal.
Farmer said ACAWU has not been recognised by CAL’s management and it had no knowledge of the plan to retrench workers before the media release was issued.
Farmer said ACAWU members were shellshocked by the announcement.
“What they are trying to do is to speak to workers individually, again, that is, in my opinion, to hoodwink the workers and perhaps steal their money as they have been doing in the past,” Farmer said.
He said with the company’s statements speaking of a reduction in its fleet, he could only surmise that this means pilots and flight attendants would be among the first to go.
He accused CAL’s management of only seeking their own interest as he said the pay cuts implemented last year were not done fairly.
“They have cut it (salaries) by every $20,000 workers have had to take a five per cent cut, so up to $20,000 they get five per cent, up to $40,000 is 10 per cent and above $40,000 is 15 per cent. So you have people who are working for $80,000 and $100,000 and so on and if they cut their salaries at all, they cut it as those they are working for $40,000,” Farmer said.
He said this was an unfair distribution of the company’s policy to reduce costs.
Farmer said he believes the “invisible” impact of CAL’s operations should be carefully considered before any move to scale down its operations takes place.
“They (Government) are just looking at it from what they charge to operate, in terms of the passenger fares and the cargo charges but they are not looking at it from the invisible income in terms of what people spend when they come into Trinidad and how that may balance off the cost of the airline itself and how some of this money keeps the economy afloat,” he said.
Works Ministry prepares for reopened borders
Meanwhile, Works and Transport Minister Rohan Sinanan told Guardian Media he is expected to form part of a team that will tour the airport in the coming days ahead of the mid-July reopening of the borders.
Sinanan said everything was on track for a smooth reopening of business at the Piarco International Airport.
“We are in preparation for the opening and sometime this week. I will be leading a team to the airport to ensure that everything is in place for the reopening- it was actually supposed to be today but we had Senate,” Sinanan said.
He said the team will also include members of the Customs Department, the Immigration Division and Port Health, among others.
Sinanan was asked to address rumours that certain international airlines were threatening to stop servicing the T&T route. He said if the source of the rumours were revealed, he would launch an investigation.
“Once we get the all-clear and the borders are open, our airports will be open for business again and we look forward to being serviced by international airlines,” he said.
Sinanan said all airlines and passengers will have to follow certain protocols, which will be set by the Ministry of Health in the coming weeks.