On Friday it was revealed that Malindo Air will be imposing a 50% pay cut on its staff in order to cope with the slowdown in business due to the coronavirus outbreak. The airline issued the order for the pay cut in addition to two weeks of unpaid leave.
Desperate times, desperate measures
According to a company-wide memo obtained by Reuters, the measures are being instituted to deal with the shortfall in revenue as the airline has had to suspend flights. It has also had to ask suppliers to defer payments.
Chief executive officer Mushafiz Mustafa Bakri said the following in the memo to employees:
“With a heavy heart, with not much of any further concrete options, we are now left with no choice but to ask each one of you to take a pay cut of your basic pay of up to 50% for the next several months until normalcy returns,”
As part of the pay cut, employees are being asked to also reduce their number of working days by up to 15 days a month.
While Malindo Air is the first airline in Malaysia to make such a move, fellow carriers in the country such as AirAsia and Malaysian Airlines have also been hit fairly hard by the decline in passengers. We may see them follow suit quite soon.
Other moves by other airlines
As many airlines around the world have had to reduce or completely suspend flights to select destinations, many employees are no longer needed. Here are some other airlines making similar moves to Malindo Air:
Emirates is asking staff to take unpaid leave for up to a month: “We have provided our employees the option to avail leave or apply for voluntary unpaid leave for up to one month at a time,” Chief Operating Officer Adel al-Redha in a statement on Tuesday.
Finnair believes temporary staff redundancies will be necessary to remain sustainable. On 12th March, the carrier will begin negotiations for two weeks. During that period, Finnair will determine which staff will leave. At the moment, the airline says that “employees within the co-operations process” could expect to leave their post for a period of 14 to 30 days. In a statement, Finnair said staff cuts would also be made outside of Finland as well.
Last week, Israeli flag carrier El Al said that it was considering cutting 1,000 jobs from its workforce. The cuts are being made in response to decreased demand and travel restrictions coming out of the coronavirus outbreak. The airline currently has a total workforce of around 6,000 staff.
It does seem likely that without sufficient government stimulus or a miraculous rebound, these lay-offs could trigger a recession. This is because people will likely prefer to save and conserve their funds rather than spend what they have.
Has your job been impacted by the coronavirus outbreak? Let us know in the comments.
We contacted Malindo Air for an official statement on this. However, no response has been received at the time of publishing.