The coronavirus disease (COVID-19) pandemic is wreaking more havoc on the aviation industry, this time causing the retrenchment of more than 1,000 employees of 1Aviation Groundhandling Services Corp in July.
“This unprecedented and uncertain situation with COVID-19 will continue to impact the aviation industry for many months ahead. Most forecasts show that it will take about two years before the aviation industry recovers from the impact of the COVID-19 pandemic. Given this situation, it is clear that the company still needs to take more drastic measures to ensure its survival,” 1Aviation said in a statement.
“With a heavy heart, we are left with no other recourse but to let go of 25% of our total workforce. Their last day as employees will be on July 20, 2020,” the company added.
Last April, 1Aviation also laid off over 400 newly-hired employees due to the impact of COVID-19.
1Aviation provides groundhandling services to sister airlines Cebu Pacific and Cebgo. Cebu Pacific owns 40% of 1Aviation and Philippine Airport Ground Support Solutions, Inc. and its president, Jefferson G. Cheng, 60%.
1Aviation assured the welfare of affected employees will be taken care of, “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.”
1Aviation said the decline in demand for air travel and resulting drop in the number of routes and frequencies have directly impacted operations, noting that “less demand for travel and fewer flights mean reduced need for ground support services.”
It added that even when commercial flights have resumed with the easing of travel restrictions in the country, the current number of flights of Philippine carriers is still “a far cry” from the numbers last year.
To cope with the situation, 1Aviation said it has implemented cost-mitigation measures, including a freeze on hiring, key projects and capital expenditure; restricting overtime and deferment of salary increases.
The year 2020 is seen as the worst financial year in history for aviation as airlines are expected to lose $84.3 billion, according to the latest financial outlook by the International Air Transport Association (IATA).
IATA said the biggest driver of industry losses is the evaporation of passenger demand as international borders closed and countries locked down to prevent the spread of the virus.
Cargo, on the other hand, is a bright spot. Compared to 2019, overall freight tonnes carried are expected to drop by 10.3 million tonnes to 51 million tonnes. However, a severe shortage in cargo capacity due to the unavailability of belly cargo on grounded passenger aircraft is expected to push rates up by some 30% for the year.
For 2021, the industry is expected to cut its losses to $15.8 billion with open borders and rising demand. Airlines will be in recovery mode but still well below pre-crisis levels (2019) on many performance measures, IATA said.
