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News Article

Millions of Aviation Jobs at Risk

By Alicia Arizpe | Tue, 11/10/2020 - 11:45

The International Air Transport Association (IATA) and the Transport Workers’ Federation (ITF) released a joint statement warning that 4.8 million jobs are at risk after the abrupt contraction in demand for air travel caused by the COVID-19 outbreak, which almost completely halted the global aviation industry. As airlines grapple with the fixed costs of storing and maintaining aircraft as their cash flow dries up, many of them may resort to shrinking their workforce to keep costs down. While air traffic has gradually picked up from the lowest points it saw earlier this year, it is still significantly smaller than it was during 2019, forcing airlines to make harsh decisions. For instance, US’ United Airlines furloughed 13,000 employees, while American Airlines cut 19,000 jobs last month. “Aviation faces an unprecedented employment catastrophe. Airlines have cut costs to the bone, but have just 8.5 months of cash left under current conditions. Tens of thousands of jobs have already been lost and unless governments provide more financial relief, these are likely to increase to the hundreds of thousands,” said Alexandre de Juniac, Director General and CEO of IATA.

While cuts have been smaller in Mexico, job losses are expected as the COVID-19 crisis continues draining airlines’ cash flow. Mexico’s flagship airline Aeroméxico has been negotiating potential layoffs with its pilots and flight attendant unions. The airline faced significant losses during 2Q20 as the COVID-19 outbreak dried up its international flights and, to a lesser degree, domestic ones. During 2Q20, Aeroméxico saw a total year-on-year drop in demand of 92.6 percent revenue passenger kilometers (RPK) and an 84.5 percent contraction in revenue. The airline’s 3Q20 was much better as its capacity increased by 67.6 percent total, with the largest gain being in the domestic market that saw a 182.1 percent increase against 2Q20. The numbers from 3Q20 might show significant improvement if compared to the previous quarter but they are still below 2019’s levels.

Altogether, Grupo Aeroméxico closed 3Q20 with a MX$3.6 billion (US$170 million) loss. The company has implemented a financial restructuration kickstarted by its Chapter 11 bankruptcy protection filing. The airline’s cost saving measures might mean furloughs for 1,830 employees from its land support, baggage handling, ticket sales and maintenance divisions, plus the aforementioned ongoing discussions with pilot and flight attendant unions.

Alicia Arizpe Alicia Arizpe Senior Writer