Economic effects of the ongoing Covid-19 pandemic that crippled the airline industry throughout 2020 and into 2020 continue to loom large…
Air France Set to Slash 7,850 Jobs Amid Pandemic
During a central social and economic committee on July 3, Air France announced a dramatic workforce restructuring plan. The company will cut 7,850 jobs including 6,560 at Air France and 1,020 at the short-haul subsidiary HOP!, equating to more than 16% of the company’s workforce. With workforce reductions, the airline mainly aims at changing its domestic business model to reduce its external and internal costs.
“For Air France, predictions of staff requirements show a reduction of 6,560 jobs by the end of 2022 out of a current total of 41,000. The many natural departures expected over this period (more than 3,500) will make it possible to compensate more than half of these job reductions thanks to a favorable age pyramid,” said the airline in a press release on Friday.
French regional airline Air France HOP!, which operates flights on behalf of its parent company Air France, will cut approximately half of its workforce.
“For HOP! the resizing of activity and the restructuring of the company linked in particular to the simplification of the fleet will lead to a reduction of 1,020 jobs over the next three years out of the current 2,420. Taking into account the estimated number of natural departures, the over-staffing figure remains at around 820 at the end of 2022.”
Battered by the slump in air traffic due to the ongoing pandemic, the French national airline intends to save $1.3 billion by 2023 with workforce and fleet restructuring. With workforce reductions, the airline mainly aims at changing its domestic business model to reduce its external and internal costs
Layoffs are expected to allow the airline to save $900 million while fleet restructuring will provide a $400 million cost reduction. However, early retirements of the A380 fleet cost Air France $500 million.
The crisis and the almost complete halt of its operations have dried up the airline’s revenues. While the airline lost most of its operational income, it still has to reimburse the equivalent of approximately $1 billion to the customers whose flights have been cancelled due to the flight restrictions and lockdowns.
“For three months, Air France’s activity and revenue fell by 95%, and at the height of the crisis, the airline was losing 15 million euros per day. Recovery looks set to be very slow due to the uncertainties regarding the health situation, the lifting of travel restrictions and changing commercial demand. In this way, even on the basis of ambitious recovery assumptions, Air France predicts that it will not see the same level of activity as in 2019 before 2024,” said the airline.
The announcement came on Friday when Air France and HOP! introduced its staff representatives with the company’s strategic orientations and the prospects for adapting the workforce following the COVID-19 crisis which has hit the group hard.
The company will present its restructuring plan at the end of July, together with the plan for the Air France-KLM Group, giving priority to voluntary departures, early retirement arrangements and professional and geographical mobility.
“Air France and HOP! are working together with the unions to implement plans that give Solidarity within the Air France Group will also be implemented with proposals for internal job offers to all employees whose position will no longer exist and who do not wish to be included in the departure plan,” stated the airline.
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