LONDON – TAP Air Portugal (TP) has announced it will cut 3,600 jobs from its workforce, as well as get rid of 17 aircraft from its fleet as the airline aims to tackle financial woes caused by the COVID-19 pandemic.
This will represent a cut of over a third of its 10,600-strong workforce, which will generate annual savings of 187.5 million EUR every year. On top of this, around 1600 contracts will not be renewed, consisting of the following:
- 500 pilots.
- 750 cabin crew.
- 750 ground staff.
Restructuring Still in Discussion
Plans for such restructuring has not come to a conclusion as of yet, but has around 10 days to present its plan to the European Commission in exchange for a 1.2 billion EUR state bailout.
This is due to TP being 72% owned by the Portuguese government. It is understood that the airline will meet with unions representing affected staff on Wednesday to discuss such cuts.
The unions are not considering strike action, as the Secretary General of Sitava, Jose Sousa explains to local media. “This is what TAP wants, in order not to pay our salaries. [The measures outlined by the airline are] stupid, provocative and unrealistic.”
The End of TAP?
The unions believe that TP is in significant amounts of trouble, due to losses over the past few years, with the latest loss posted at €582m, due to the cause of the pandemic.
However, the Portuguese government believe that a strong restructuring plan is needed in order to prevent the end of the airline. The Prime Minister of the country Antonio Costa likened the plan to a “surgical operation.” Other unions like the SNPVAC have labelled this as a “brutal cut in staff and salaries outlined”, stating the opposite to Sitava by saying it won’t accept the measures “peacefully.”
It is expected that the European Commission will accept the terms of the bailout, especially as it has invested money in the likes of Air France-KLM (AF/KL), Brussels Airlines (SN), Lufthansa (LH) and others.
A Rough Year for TAP
Back in March, the airline announced it would reduce operations in line with demand caused by global lockdowns due to the COVID-19 pandemic. By June, it had posted a significant Q1 loss of USD$443m, after what has been witnessed as a positive start in the first two months of the year.
Then in September, it decided to defer lease payments on 60% of its Airbus aircraft, but was only looking to sell eight aircraft originally. This time, the figure has gone up to 17. With that in mind, its easy to suggest that the fact the number of aircraft to be sold has gone up states that the airline is searching for liquidity.
There Have Been Successes
In the midst of the pandemic, TP has managed to achieve quite a few things when it came to its operational restarts. In July, it managed to launch services between the Azores and Boston (BOS) using its Airbus A321 Long Range aircraft.
Third, it was able to debut services between Montreal (YUL) and Lisbon (LIS), Munich (MUC) to Lisbon (LIS), Newark (EWR), Toronto (YYZ), Washington (IAD), Miami (MIA), San Francisco (SFO) and Chicago (ORD).
On top of this, TAP has been able to reinstate its South American takings in the likes of Sao Paulo (GRU), Rio de Janeiro (GIG), Recife (REC), Fortaleza (FOR), Belo Horizonte (CNF), Brasilia (BSB), Salvador (SSA), Natal (NAT), Porto Alegre (PDA) and Maceio (MCZ).
Thinking to 2021
Finally, the airline has been thinking ahead to 2021 as it announced its Summer schedule back in September, with services to the likes of Cancun (CUN), Cape Town (CPT), Agadir (AGA), Santiago de Compostela (SCQ), Fuerteventura (FUE), Zagreb (ZAG), Oujda (OUD), Djerba (DJE) and Monastir (MIR) to be launched.
It remains clear that whilst TAP has suffered substantially, it has done a lot in the space of eight months, meaning that the bailout package will look more attractive to the European Commission.
The next thing to look out for will be the outcome of the Commission in ten days time, where it will in theory make or break the way that the airline will run going into the future.
Featured Image: TAP Portugal Airbus A330-202. Photo Credit: Wikimedia Commons.