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240 Laid Off as Icelandair Combats Drop in Demand
Before what is usually the busy summer months for Icelandair, the carrier has been forced to look towards retracting itself in size as COVID-19 epidemic affects demand for travel for the next few months. In order to stay afloat, Icelandair has looked at employee reductions to cut costs.
The airline will lay off 240 employees and cut the hours of 92 percent of its workforce as a means of cost-cutting. The airline says that these cut hours will move employees from full time to part-time work. But full-time workers are also not safe from pay cuts, with full-time employees seeing a 20 percent drop in pay while executives will take a 25 to 30 percent drop.
Icelandair has been heavily impacted by other countries’ measures of combating the virus, with the airline seeing both its North American and European route maps vanish and most of its fleet grounded as a result. The airline currently operates just 14 percent of its original schedule, with cargo operations via Icelandair Cargo also continuing. The flag carrier expects to see its schedule further decline as the market continues to evolve and Iceland braces for more strict domestic measures to counter the spread.
Icelandair says that the cuts made are necessary in the current marketplace. Icelandair CEO Bogi Nils Bogason said, “We are living in unprecedented times where a global pandemic has significantly impacted international travel. Our priority is to secure robust operations of Icelandair Group for the future. The measures we announced today are difficult but necessary to mitigate the impact of the situation on the Company’s operations and cash flow.”
The company also mentioned that the lack of international travel has impacts on its other assets, which includes lodging chain Icelandair Hotels and domestic carrier Air Iceland Connect. Icelandair is also reviewing and trying to revise its current contracts with suppliers to further cut costs.
Iceland’s current opinion of coronavirus is fluid, with the current stance being for any Icelander who arrives from offshore being required to isolate for two weeks. The country currently has 551 active cases on the island nation as of March 23, 2020.
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