- British Airways, Emirates, and now Air France: companies all over the world are announcing job cuts following the cessation of their activity during confinement.
- According to an estimate by the International Air Transport Association, airlines would lose $ 84 billion in 2020. A situation that inevitably cuts their payroll, explains Paul Chiambaretto, professor at the Montpellier Business School.
- Specialist in the airline sector, he provides an update for 20 Minutes on job management strategies in airlines.
The announcement was feared and expected. On Wednesday, the management of Air France announced its plan to cut 8,000 jobs via a voluntary departure plan. A figure that did not fail to react to the Minister of Economy and Finance. While Bercy has granted 7 billion euros in loans, Bruno Le Maire would have liked it to be “of course” lower, calling on the company not to initiate forced departures.
In any case, the example illustrates the gravity of the crisis. Around the world, and despite government support, airlines, from British Airways to Emirates to Lufthansa, are taking steps to reduce the airfoil when others are already filing for bankruptcy. In 2020, worldwide, airlines could suffer more than $ 84 billion in net losses, and still others in 2021. Professor of strategy at the Montpellier Business School and director of the Pegasus chair dedicated to air transport, Paul Chiambaretto answers 20 Minutes questions about the future of airline employment.
How are airlines managing employment given the scale of the crisis?
The Covid had a very strong impact on the treasury of airlines, both traditional and low cost, and to cope with it, some had to go into debt. They are today in a critical financial situation, which obliges them for some to reduce their payroll, because it is often their first item of expenditure.
This big economic crisis will therefore generate social breakdown. But not all airlines have the same logic. Some, like Air Caraïbes or French Bee, opt for voluntary salary cuts in order to preserve as many jobs as possible. Others opt for dry layoffs. Finally, there is the strategy of voluntary departure plans, the objective of which is to reduce the wage bill in the smartest way possible. And probably, some companies will try to combine these tools according to the profiles of employees.
Cut jobs now, is it justified given the likelihood of recovery?
What is complicated is that due to financial difficulties between 2008 and 2015, many companies have not recruited much in recent years. The average age of employees has therefore increased. In the end, the companies have a certain number of employees, among pilots or hostesses and stewards, who are less than three or four years from retirement. If traffic returned to normal in one to two years, some would have only a few months or years before retirement. In these cases, the question arises of making them leave early, because keeping the qualifications of flight crews in the depths of the crisis (they must carry out a certain number of flights or train on simulators) can prove to be very costly. , especially if the recovery takes time to arrive.
Does this mean that the Covid-19 pandemic can have "good backs" to save money?
No. No company wants to fire 8,000 people. Currently, the risk is that of bankruptcy, not of maintaining shareholders' dividends. In addition, the airlines were already experiencing staff tensions because they had recruited few. Remember that six months ago, we were talking about a pilot shortage…
What is actually complicated is that the airlines are not very profitable structurally. They are constantly sensitive to economic conditions as well as international tensions. With the increase in the price of a barrel of oil, their profits dwindled last year. With the exception of the 2015-2019 period when they made a profit, companies regularly experience negative cycles that last for several years. Globally, companies earned only an average of $ 6 per passenger, which is little.
Why ?
Air transport is an overcapacity sector, with too many companies going bankrupt after a few months or years, but which succeed in generating self-destructive price competition. In this context, the crisis is an accelerator of change which forces some to take decisions sooner than expected. Beyond the staff reductions, some companies have decided to accelerate the withdrawal of certain aircraft, such as Air France or Lufthansa for the A380 or A340.
In the United Kingdom, a study announced for aviation a fate similar to that of the coal industry in the 1980s. Are we going to witness such a decline?
It is very complicated to project oneself because there is no equivalent in history. The drop in air traffic is 70% worldwide, and from 90 to 95% in Europe. 9/11 did not have such an impact, yet the traffic took years to recover. In aviation, there is a rule that says that the growth of transport is globally double that of GDP. If your GDP increases by 3%, air transport will increase by 6%. But unfortunately, it also works in the event of a recession.
Even if one starts to project oneself from the number of tickets purchased or visits to online ticket sales sites, it is still impossible to say how quickly the recovery will take place. If the situation seems to have stabilized in Europe, the uncertainty relates to the other continents which are not yet finished with the waves of contamination. The problem is that the majority of the traffic and income of traditional airlines like Air France, British Airways or Lufthansa comes from their intercontinental flights.
Are low cost more spared?
Because they mainly operate within the European continent, low-cost airlines such as Ryanair or Transavia are more preserved. In addition, they also had a healthier financial situation before the crisis. But even in their case, it is also difficult to anticipate demand. These companies are also those that are not recognized for the quality of their after-sales services in the event of a problem. What can count in the current period considering the risks of cancellations.
Can public authorities make a difference in the economic situation of companies?
In France, the government has a position that could be described as schizophrenic. Two loans were paid to Air France. This is good, but the State conditions these loans to the cessation of a certain number of activities. It is like telling someone that they are given a drug but that they are not allowed to give them the right dosage. In addition, only Air France has been supported: for the moment, the majority of the other French companies (with the exception of La Compagnie) have not obtained any aid or loans even though they are smaller and more vulnerable. . And we must not forget either the whole ecosystem which has also been neglected. Airports and service providers are not supported.
Can we expect something from the European Union?
The problem is that in Europe, you can't do anything. Following the difficulties of Alitalia which were amplified by the pandemic, the Italians wanted to save their airline, but they were criticized by the European Commission for reasons of distortions of competition.
The European Union could consider revising its positions as soon as state aid becomes more universal and non-selective. But the problem is that she is committed to her "Green deal", and helping the airlines would be the certainty of having all the NGOs on her back.
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- Covid 19
- Economy
- Airline company
- Plane
- Economic crisis