More than 1,000 employees, or a quarter of its workforce, have been laid off by Cebu Pacific due to local and international travel slump as a result of the COVID-19 pandemic—the largest single-retrenchment in the aviation industry brought on by the health crisis. The workers’ last day will be on July 20.
The 1Aviation Groundhandling Services Corp. of Cebu Pacific said that this decision was part of its “drastic measures to ensure its survival” as the pandemic continues to impact air travel. Aviation ground handling includes baggage sorting and aircraft towing services. It is a key sector in the airline industry, and Cebu Pacific is its part-owner and biggest client.
Four hundred newly-hired workers were also laid off last April while 190 employees were let go in March in response to the Luzon lockdown. Aside from Cebu Pacific, other local carriers resorted to the discharge of workers to cut costs. Philippine Airlines had to dismiss 300 of their employees last February while AirAsia says it will lay off 260 workers by the end of June.
“All the workers who would be laid off will be treated fairly and respectfully. The welfare of affected employees will be taken care of as we always do, with packages that are above what the law requires. We also assured them that they will be prioritized for hiring once the situation stabilizes and business picks up again,” says 1Aviation.
Cebu Pacific CEO Lance Gokongwei notes that the total net loss of the company has already amounted to P1.18 billion in the first quarter of 2020 from a P3.36 billion pre-pandemic, which means that they will have to reduce their investments this year. The Air Carriers Association of the Philippines called the COVID-19 crisis an “existential threat” to the airline industry. According to the International Air Transport Association, the recovery of the local airline industry could take at least two years.
These series of retrenchments, as an inevitable result of flight reductions and travel restrictions, adds to the increasing unemployment rate in the country as the economy slowly slides into recession. In June, the Philippine Statistics Authority reported a 17.7 percent unemployment rate with 7.3 million Filipinos left jobless in April during the height of the lockdown.
The global airline industry is expected to lose $4.48 billion dollars with at least 548,300 job losses, which is why companies highly depend on stimulus packages set by the government to aid in their recovery, or at least to keep them afloat. A total of P70 billion is allocated by the Philippine government for transport business, including maritime and public utility vehicle operators’ assistance as well as trucking, shipping and railways.
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