Caribbean Airlines Applies Short-term Measures To Support Recovery Of Airline

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Caribbean Airlines Applies Short-term Measures To Support Recovery Of Airline

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Caribbean Airlines Applies Short-term Measures To Support The Recovery Of The Airline
21 October, 2020

Caribbean Airlines advises that in the coming weeks the airline will apply temporary measures to support the recovery of the airline.

Reduced demand due to the global pandemic has presented significant challenges to Caribbean Airlines’ revenue and cash position and it must now take further steps to streamline expenses and its manage cash.

After careful consideration, discussions with key stakeholders and with the support of the Board of Directors, the Company intends to implement certain temporary measures to cut costs and reduce overheads from October 15, 2020. Some of the temporary measures include but are not limited to:

∙ Salary reductions for a period of eight (8) months from mid-October 2020 for those paid more than $7500 (TTD) per month, with reductions tiered to be higher for those on higher remuneration

∙ Temporary layoffs for approximately one third of employees for three (3) months, depending on their role and the current needs of the business ∙ Continued cost reductions wherever possible, including reducing contractors and temporary workers and allowances that are not relevant at this time

The airline confirms that standard industrial relations criteria were used to select the employees who will be temporarily laid off. The leadership team recognizes the impact of these measures on its employees and their dependents and has put systems in place to support those affected.

Caribbean Airlines assures all stakeholders that its current operations are not impacted by the temporary layoffs – this includes our Cargo operations, the domestic Air Bridge between Trinidad and Tobago, the Kingston and Barbados based commercial services and special Government approved flights to/from Trinidad and Tobago.

Caribbean Airlines thanks its valued customers and all concerned for their continued support.

BACKGROUND:

Globally, airlines are experiencing unprecedented challenges caused by the COVID-19 pandemic as there continues to be a slump in demand and on-going travel restrictions.

The International Air Transport Association (IATA) is expecting airlines to lose around $84 billion in 2020, making it the worst financial year in the history of aviation.

As such, to safeguard the viability of the business, Caribbean Airlines is putting in place some temporary measures to help reduce its operating expenditure.

Below are some questions and answers to guide your queries.

What does Caribbean Airlines mean by a temporary layoff?
A temporary layoff is a period of employer-initiated suspension of contracts due to no fault or misconduct by the employees but due to circumstances which are beyond the control of the employer. Under industrial relations law in most jurisdictions, employers can lay off employees temporarily for up to 90 days, unless exceptional circumstances persist. The employer also has the right to recall workers at any time during the 90-day period. During this period the salary payments of employees affected will be suspended.

What criteria were used to determine which employees are temporarily laid off?
The criteria were based on the principle of Last In, First Out (LIFO); all things being equal, unless there was justifiable and reasonable operational considerations to do otherwise.

How many employees have been affected and in what areas?
Approximately one third of employees across the entire Caribbean Airlines network.

Will these temporary measures impact the airline’s flight services and cargo operations?
No. These temporary measures will not affect current flight services and cargo operations. Cargo, the domestic air bridge between Trinidad and Tobago, the Kingston and Barbados commercial operations and special Government approved flights to/from Trinidad and Tobago will NOT be affected.

How long will persons be temporarily laid off?
These measures are intended to be short term and will take effect from October 16, 2020 to January 2021 (90 days/3 months)

What happens if after this initial three (3) month period things do not improve?
The COVID-19 pandemic is an exceptional circumstance that could not be contemplated. Caribbean Airlines has concrete business recovery plans which have been presented to the shareholders.
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We are working towards ensuring the long-term survival of the Company and in this regard must achieve cost reductions that reflect our changed revenue position. These temporary measures represent the best way that we can achieve this. The alternative, if we do not achieve our target cost reduction, would be to consider other measures that may lead to permanent separations.

How long will salaries be reduced?
Salaries will be reduced for eight months from October 15, 2020 to June 15, 2021.

By how much will salaries be reduced?
Salaries will be reduced on a tiered basis, depending on the salary level. Persons paid $7500 or lower will not have their salaries reduced. Employees’ pension benefit and medical plan will not be affected.

How much savings will these measures bring to the airline?
Projected monthly savings will be around USD1.6M

When will the employees return to work?
Employees will be recalled to work as the business needs warrant and based on job function and seniority.

Will there be Employee Assistance (EAP) available for employees?
Yes. The Company takes its duty of care seriously and has ensured that support is in place for persons needing assistance. There is also a hotline set-up to handle any staff queries.

Will employees have to re-apply for their position?
No. Employees will be recalled to work in their original positions as the business needs warrant.
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