State-owned Caribbean Airlines has announced it will temporarily lay off one-third of its staff while at the same time cut the salaries of everyone making over $7,500 per month.
Under the terms of the cuts, the higher one earns the larger the salary reduction. The decreases in salaries are expected to last for eight months and range between 5 and 15 per cent.
The airline, like all carriers globally, is in financial trouble and has been in a tailspin since the COVID-19 pandemic hit the region, forcing the closure of borders and grounding of the airline.
CAL has only been able to fly the unprofitable Trinidad/Tobago route in an effort to keep the twin-island republic connected and do so at 50 per cent capacity and do a few charter flights for nationals returning home.
For a while, it was able to stay afloat due to a US$65 million government-guaranteed loan, but this money has now run out and the global situation has not improved dramatically.
Therefore, hard decisions had to be made and the airline’s management has made them.
However, just as CAL’s management is sending home workers and cutting salaries, including their own, comes word that its Chief Executive Officer Garvin Medera received a $500,000 bonus.
From what we can glean, the bonus is part of his contract and is based on his performance in the job. In addition, the bonus was paid based on the performance of the airline in 2019 and not in 2020.
Further, reports are that bonuses were approved by the board of directors for all the staff for 2019 and was awaiting the Government’s HR committee’s approval for payment when COVID-19 hit. These would have been the first bonus payments the staff had ever received since the start-up of the airline and was a reward for turning it around and having two consecutive years of increasing operational profits.
In principle, Mr Medera is entitled to his bonus payment, assuming he met the key performance indicators and that it was a legitimate part of his contract.
If the country and State Enterprises want the best to lead them, then salaries will have to be paid to attract the talent required.
One must not forget the nature of the industry that CAL is operating in. It is one in which there is fierce competition – where even the most successfully run airlines are constantly challenged in managing costs and maximising revenue.
It is true the timing may be bad and for workers who did not receive their bonuses and are being asked to take more pain, it is a bitter pill to swallow.
Should the bonus payment have been delayed? Maybe. But it must be paid.
Mr Medera is well within his rights to demand and accept his bonus. What the challenge will be now for him and his team is ensuring that it weathers this present situation and ensures CAL can soar into the future profitably.