In response to ongoing financial issues caused by the virus outbreak, Kuwait Airways announced today it would be cutting up to 1,500 jobs. This amounts to 25% of its workforce of 6,000 employees. The airline has not specified which departments or roles are being considered, but it did clarify that Kuwaiti citizens would not be affected.
Kuwait citizens not at risk under government plans
Kuwait Airways announced its decision to cut jobs in a tweet. Although it is not clear which roles are at risk, the airline has said that only foreign employees and ex-pats will be at risk. Any foreign employees married to a Kuwaiti national would also not be safe.
The decision to focus on job cuts of foreign individuals is at the recommendation of government MPs who have suggested that employing locals will help to stimulate the economy. Currently, Kuwait nationals make up just 30% of the country’s population. There have been calls for state-owned businesses, such as the airline, to employ more locals. Kuwait Airways has not commented on whether it would eventually re-hire workers in some roles.
More problems for Gulf carriers
Kuwait Airways is just the latest in a long list of Gulf carriers that is preparing to make significant cuts. Emirates is rumored to be considering up to 30,000 job losses. Both Qatar Airways and Etihad have also suggested they will need to cut down staff numbers.
The Gulf-based carriers have been hit hard by the virus outbreak as most make their revenue from long-haul, international flights. Very few have domestic or short-haul offerings, which means the recovery of the carrier depends on international restrictions lifting around the world.
Gulf airports are hub airports that are strategically placed to offer great connecting flights around the world. This means, unlike airlines based in Europe or the United States, recovery will probably be longer, slower, and more difficult.
Repatriation and cargo
Despite most of the Gulf carriers being at least partially state-owned, the International Air Transport Association (IATA) has said that unless the government steps up to provide more support, we could see more job cuts across several carriers. According to figures from the IATA, Gulf airlines risk losing more than $19bn this year. This translates to putting almost one million jobs at risk.
So far, most of the airlines have sustained some form of income by offering repatriation flights. The strategic hubs mean they are well placed to move citizens around the globe as they return home. The other principal source of income has been cargo flights and select medical flights. Again, the carrier’s vital position means they have been able to transport medical professionals and medical supplies around the world.
Kuwait Airways making a loss
For Kuwait Airways, in particular, the virus has been awful news. Unable to operate either repatriation flights or cargo flights, the entire fleet has been grounded since March. For a carrier in good shape, the virus is bad news, but not a death certificate. However, Kuwait Airways has been making a loss for several years now. In 2019 its losses fell to KD131.9 million ($435 million). That equates to over $17 million of loss per aircraft in its small fleet of 27.
The airline raised some capital from its shareholders in July last year and was going to use 2020 to employ more staff, overhaul its fleet, and cut unnecessary operating costs. It had to planned to hire staff but now finds itself having to lay staff off instead.
What do you think of Kuwait Airways’ plans to lay off foreign staff? Do you think it is right to prioritize nationals? Let us know your thoughts in the comments.