**Update: 22/05/20 @ 14:30 UTC – Statement included from Etihad**

Abu Dhabi-based carrier Etihad Airways is rumored to have plans to lay off 1,200 of its employees. The rumors of a workforce-downsize are accompanied by whisperings that the airline may also retire its Airbus A380 fleet while cutting its plans to add the A350. The news, published earlier today, comes from "company and industry sources," according to Reuters.

A much-needed reduction

This unconfirmed news comes as many airlines around the world make similar moves to their workforce compositions. With significantly reduced travel demand at the moment, airlines have an over-capacity problem, with scores of aircraft parked in long-term storage facilities around the world. With fewer flights and fewer aircraft, naturally, there is a reduced need for workers.

A short-term crisis would probably see 'wealthy' airlines hold on to their redundant staff through the duration of the hardship. However, airline executives and industry experts around the world consistently provide "two to three years" as the time frame for the industry to attain 2019 traffic levels once more. With this longer time frame in mind, airlines are forced to shrink quickly and reduce cash burn as soon as possible.

With that being said, Etihad's rumored plan to lay off 1,200 employees is relatively small. The airline had 20,530 employees as of August 2019, but already laid off hundreds of staff. If we assume around 500 staff have already been let go, then losing 1,200 employees would only be an additional 6%.

With many Middle Eastern carriers hiring migrant workers and ex-pats from around the world, this may have far-reaching effects on labor markets further afield. Airlines like Etihad have often hired workers from Eastern Europe and the Balkans as well as South Asia and the Phillippines. If these workers return to their homes, there may be an over-abundance of airline workers in those regions.

A relatively small cut

While Etihad may let go of 1,200 employees shortly, it pales in comparison to what other airlines are doing. Scandinavian carrier SAS had already decided to cut 90% of its workforce or 10,000 employees. Norwegian had also cut 90% of its workforce - equivalent to roughly 7,300 workers.

The biggest round of cuts we've seen recently has been from Air Canada. The Canadian carrier has plans to cut 50-60% of its staff within the next few weeks. This equates to as many as 20,000 workers.

An Etihad spokesperson has responded to our inquiry saying:

“The coronavirus pandemic has brought unprecedented challenges to businesses around the world, and Etihad is no exception. It is clear the demand for travel in the near future will be significantly reduced and as a result we must make difficult decisions to ensure Etihad will weather this storm. We are incredibly proud of our world-class workforce, however, we have had to make redundancies across several areas of our business to reflect current market conditions.”

Conclusion

With Etihad abandoning its plans to become a global hub airline similar to Emirates and Turkish Airlines, it has further reason to downsize its operations. Indeed, major competition in recent years from both Emirates and Qatar Airways have presented challenges for the UAE carrier. Its revised strategy, according to Reuters, is to become a "mid-sized carrier operating direct flights." Whether or not this strategy will prove successful remains to be seen.

Do you think the rumors are true? Or worse, could the number of layoffs be higher? Let us know your thoughts in the comments.

Simple Flying reached out to Etihad requesting comment or statement on this subject. However, at the time of publication, no response was received from the airline. We will update this article if any new information comes on.