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Azul, GOL and LATAM Brasil Negotiate Workforce Adjustments with Unions
After the initial shock caused by the arrival of COVID-19 in Brazil and the economic and social changes that were accordingly enacted, local airlines have started to take action against the longer-term effects of the economic crisis caused by the pandemic.
As this includes the grounding of aircraft, capacity adjustments and related cost-cutting measures, labor cost reductions have come as a necessary side effect, as fewer crew are needed to operate the lower number of flights. And while it becomes clear that a demand recovery to 2019 levels is much further off than was originally believed, Brazilian airlines have started to negotiate workforce agreements with the unions and its represented workers.
The first move was made this week by GOL, the country’s largest airline by pre-crisis domestic traffic. An agreement made with the union representing the airline’s crew, which includes 5,152 workers, will preserve all jobs for 18 months.
The agreement — made separately between captains, co-pilots and flight attendants and voted on in online meetings — involves both voluntary and compulsory measures, such as unpaid leave, retirement plans and voluntary layoffs with rehiring priority. The active workforce is expected to work part-time until the end of the regime.
Celso Ferrer, GOL’s Vice-President of Operations, thanked the “employees that took part in this voting and for being together with the company in this delicate time, and also to the National Aeronauts Union [SNA], that showed itself totally committed in the search of the best solutions,” reported Folha de São Paulo news outlet.
Folha also reports that this agreement may serve as a “model” to other airlines of the industry, principally Azul Brazilian Airlines and LATAM Brasil, the two other major carriers in Brazil. Thus far, the two have not officially announced any longer-term agreement yet, although executives of both have confirmed workforce adjustments will be made necessary and both are in negotiations with the unions.
Azul CEO John Rodgerson, sent a video to its workers saying that “difficult decisions” will be made within the next days, according to O Globo.
“Unfortunately the rebound is much slower than what we forecasted,” Rodgerson said in the video. “We have about 150 daily flights in June and we are trying to increase capacity to 250 in July, but our capacity as a company is of almost 1,000 flights a day. We will have to take difficult decisions because we can’t have a revenue drop by half and a cost that didn’t fall. We will work with the unions. The intention is to maintain as many jobs as possible”.
Likewise, LATAM Brasil, whose parent company in Chile recently declared bankruptcy, has presented demand scenarios to the SNA. The airline forecasts a 34% reduction in the pilots, as well as a 41% reduction of flight attendants, will be necessary to meet demand levels in 2022, O Globo reported.
According to Ondino Dutra, President of SNA, the airline is willing to maintain 100% of its workforce. However, that would naturally require pilots and flight attendants work a lower number of hours. O Globo also affirms that the union is proposing agreements similar to those made with GOL.
Brazilian airlines are in a tough spot. While other countries are starting to reopen with the drop of COVID-19 cases, the country’s curve of coronavirus cases is still trending upwards. As a result, it is unclear when and how demand will consistently and strongly return, despite a number of capacity increases in previous weeks following a record-low month of April.
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