A massive downsizing may be looming in the airline industry as domestic carriers ground no fewer than 76 planes amid the coronavirus pandemic that has crippled activities across the country.
Following plummeting passenger demand and lockdown, the eight domestic airlines on Friday suspended flight operations.
This came barely two weeks after the Federal Government closed the Lagos, Abuja, Kano and Port Harcourt airports to international flights.
Air Peace, Arik Air, Aero, Dana Air, Ibom Air, Max Air, Azman and Overland Airways had stopped regional operations weeks earlier, citing low demand and concerns over the COVID-19 pandemic.
Consequently, the eight local carriers have parked no fewer than 76 planes in Lagos, Abuja and other airports.
Also, over 6,000 airline workers have been rendered redundant, with a few airlines sending their workers on compulsory leave following the shutting down of their operations.
According to findings by Sunday PUNCH, Air Peace, which possess the highest fleet of 27 aircraft has over 2,000 workers.
Arik Air has parked seven planes and has about 1,800 workers, according to findings.
Aero has over 850 employees and has four planes in its fleet as well as a functional hangar where routine aircraft maintenance is carried out on a commercial basis for other airlines.
Dana Air has about 630 workers and will be grounding about nine planes throughout the period of the lockdown.
Max Air, which has functional private charter and Hajj business outfits, possesses 14 aircraft in its fleet with over 600 employees.
Azman has parked five aircraft and the number of employees could not be ascertained as of the time of filing this report.
Overland Airways has also parked seven planes and the number of employees could not also be ascertained as of the time of filing this report.
However, Overland Airways said it would only temporarily shelve its flight operations from March 28, 2020 to April 5, 2020.
Ibom Air owned by the Akwa Ibom State Government has over 200 employees and has parked three airplanes.
Following the suspension of operations, the majority of the airline workers have been asked to stay at home.
While most of the airlines have yet to decide whether to pay their workers during the two to three weeks break, Azman Air issued a circular to all its workers to go on compulsory leave without pay.
The memo on compulsory leave without pay by Azman Air Services Limited issued on March 25 was signed by the General Manager, Alhaji Lawan Suleiman.
It read in part, “As you are aware, the current happenings worldwide regarding the COVID-19 issue, particularly in Nigeria, where it persists on every basis and the protective measures being taken by almost all work environments, including government and private organisations, management deems it imperative to suspend operation generally.
“This is with a view to protecting both passengers and staff from the impact of the phenomena.
“In view of the above, Azman Air management informs all staff that effective midnight March 27 it will suspend and shut down operation for two weeks to resume work on April 11. It is to be noted also that all night guards are exempted from the suspension of operation, therefore, remain on duty to ensure the safety of our aircraft.
“Management regrets this action is taken, which is beyond its control. All workers’ March salaries will be paid on or before the effective date and require them to be on the alert to resume duty as soon as the phenomenon subsides or is controlled.”
The eight carriers will be losing billions of naira in revenue during the shutdown, aside from fixed cost which runs into billions of naira.
The Chief Operating Officer, Air Peace, Mrs Toyin Olajide, said the airline had already lost N2.1bn in the past three weeks due to plummeting load factor which she said dropped below 40 per cent.
Before the closure of the airports to international flights, Air Peace on March 19 suspended its flight operations to Dakar, Senegal and Liberia as a result of the coronavirus crisis, and cut down its Freetown, Sierra Leone, Banjul, Gambia, and Accra, Ghana, operations.
Olajide said, “We have been losing a lot. We lose money daily because passenger figures have dropped by over 60 per cent.
“We lose N100m daily and we have been doing that in the last three weeks. People are no longer flying. We now attract passengers by lowering the fares in the past three weeks.”
The Chief Executive Officer, Aero Contractors, Capt. Ado Sanusi, said in line with the federal and state government’s instructions for people to stay at home, the airline had instructed its workers to work from home.
“Those that can work from home can, those that cannot work from home will come to support our operations because if you suspend flight operations it doesn’t mean you have suspended working completely because there are people that will come in to make sure that our airplanes are preserved and we still operate a Maintenance, Repair and Overhaul which is open,” he said.
Sanusi said airlines would lose huge sums of money, adding that losses in terms of manpower and revenue would be colossal.
He said, “At the end of the day, airlines would have lost some money and if the Federal Government does not intervene in the form of bailout, people will lose their jobs in the entire aviation industry.
“Definitely some companies will go under and some will reduce operations or lay off workers, so it is left for the Federal Government to intervene and ensure that it reduces all those impact. The losses will be colossal because we have not had to shut down completely before.”
He stated that from the scheduled services, the revenue from ticket sales that airlines would lose within the two to three weeks suspension would not be less that N4bn each.
“If a company makes like N3bn to N4bn a month, it means in two weeks it will be losing between N1.5bn and N2bn, but the impact will be more than ticket sales. Some of the airlines have leased aircraft, some have leased engines then the aircraft are being maintained based on calendar, it is a whole thing that goes into aviation,” Sanusi said.
According to the former managing director of the Nigerian Airspace Management Agency, the airlines will need government grants to enable them to pay April salaries.
Sanusi also said if the crisis persisted, the airlines might not have no option but to ask some workers to go on leave without pay.
He, however, expressed optimism that the pandemic would be over soon.
The International Air Transport Association some weeks back said Nigeria’s aviation industry would lose no fewer than 22,200 jobs and $434m over the coronavirus pandemic.
The Managing Director, Dana Air, Mr Jacky Hathiramani, said the airline would be losing at least N20m in revenue on each of its nine planes on a daily basis as a result of the shutdown.
According to the airline chief, the Federal Government may need to intervene to save the airline industry from job losses.
Hathiramani said the Central Bank of Nigeria would need to introduce an intervention and stimulus that would help the carriers from failing as a result of the impact of COVID-19 on the airline industry.
He said the airline had yet to take a decision on whether to pay the April salaries of its over 600 workers or not.
The Managing Director, Ibom Air, Mr George Uriesi, lamented the impact of COVID-19 on the airline industry, noting that the carrier would be losing at least N12.5m in ticket sale revenue alone on a daily basis on each of its planes.
He also said they were to have received two additional Bombardier CRJ-900 planes but were forced to suspend action as a result of COVID-19.
“We are in expansion mode now. But unfortunately, we can’t do that now as a result of the pandemic. You cannot be taking delivery of new planes in this kind of situation. We have been forced to park all the planes in our fleet for now until the situation improves,” he said
The General Manager, Operations, Max Air, Mr Raymond Omodiagbe, said the airline was losing about N96m on a daily basis as a result of grounding its operations.
According to him, a decision has yet to be taken on whether it will pay the April salaries of its over 600 employees asked to go home.
He said they could not carry out their Hajj, scheduled domestic and charter operations as a result of COVID-19 and that all 14 planes had been grounded.
We’ll need stimulus to come back, airlines operators tell FG
Following the shutdown in the aviation sector over the coronavirus pandemic, the Chairman of Airline Operators of Nigeria, Captain Nogie Meggisson, has said airlines will need stimulus from the Federal Government to return to operations.
Meggisson, in an interview with Sunday PUNCH, said airline operators might not consider sacking workers as an option during the shutdown period.
Considering the burden of losses that airline operators might incur over the shutdown of the critical sector, Meggisson said it would be imperative to give the stimulus to domestic airlines to create an enabling environment to bounce back
He said, “From my position, any sacrifice for coronavirus cannot be quantified at this time. The only thing that we want, like what the outside world is doing, is to compensate the airlines because we know that the burden is heavy and we cannot be insensitive to say we would want to still go commercial right now, we want to put Nigeria first.
“However, as other countries are doing, the Nigerian government should also stand up to back us. They should create an enabling environment to jumpstart us again because nobody will be able to jumpstart us as airlines at this period. As you know, the salary of one pilot is something huge and if you are running a shift of 80 pilots, you know what that means.
“The Federal Government has to give us a stimulus. If you look at the forefront of jumpstarting any economy, aviation is part of the pillars as one of the enablers. In the start-off plan after this coronavirus pandemic, the government has to if not you are going to put the cart again before the horse. So, part of the remedy to jumpstart the economy after this whole issue has ended is to give us stimulus.
“One of the ways to jumpstart the economy is aviation because people will need to move and you cannot expect the private companies to get loans after shutting down for a period. You cannot start a plane and start using it after it’s been out of use for a period, it must be serviced.”
On the sacking of workers, if the problem persists, Meggisson said discussions were ongoing, adding that suspending the payment of salary was an option instead of laying off the workers.
“Sacking workers is not the issue right now. We need to see how we can manoeuvre through this period. There is no need to sack, where are they going to? Like in the United States, what they do is pay off because everybody knows everything is suspended. If it is two weeks you can project, but nobody knows when this is going to end. God forbid if this thing lasts till September, for instance,” he said.
When asked to react that some airlines had said they would not pay April salary because they had sent workers home, Meggisson said, “It is not April salary. What they said is that they are suspending salary because they do not know when they will come back. So, airline operators cannot expose themselves to salary running into millions monthly when they are not operating. I am not saying it is right or wrong, but airlines are discussing with their staff but there is no sacking. If they start operations today they cannot deny their workers their salaries.”
By Oyetunji Abioye, Mudiaga Affe and Maureen Itua-Maduenyi
Source: Punch Newspaper