LONDON — Air Seychelles announced over the weekend that they are to cut up to 174 of its staff as part of the carrier’s current restructuring plans.

This has come following the current turbulence experienced by the Etihad Aviation Group (EAG), who is Air Seychelles’ largest shareholder. EAG has already had trouble over the past 18 months with the demise of Alitalia and Air Berlin falling under their purview.

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The Minister for Tourism, Civil Aviation, Ports and Marine Maurice Loustau-Lalanne said the following regarding the redundancies:

“The labor force will be reduced and 202 posts will be affected.  These will include 174 employees who will lose their jobs and 28 vacant posts which will not be filled. It is regrettable that Air Seychelles has to reduce its commercial and operational activities which are affecting many jobs. But this will help to save the national airline. Together with its partner Etihad Airways, Air Seychelles will concentrate on reducing its costs of operation, ensure it covers its expenses and make profits. It will also aim to maintain its title as leading airline in the Indian Ocean as well as improving its service with a Creole spirit.”

In his speech, Lalanne also mentioned how the airline will concentrate in areas where it has a greater chance of achieving profit such as ground handling services, cargo handling, domestic air operations as well as their currently profitable routes to Abu Dhabi, Mumbai, Mauritius and South Africa respectively.

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According to CH-Aviation, Air Seychelles will be suspending routes to Paris Charles De Gaulle from April 28th and will be returning their two Airbus A330-200s to leasing company AerCap.

Overall, these cuts represent nearly one-fourth of the total workforce of 800 people that work for the airline, highlighting the utter significance of this news.

Political Implications

Picture from Air Seychelles.

Like with the Alitalia bankruptcy, the news of this cut has not been welcomed in Seychelles. Both of the leaders in the Seychellois government, Wavel Ramkalawan, Leader of the Opposition and Charles Decommarmond, who is the Leader for Government Business, collectively rejected this speech made by Lalanne and wants the job cuts to be on hold whilst political discussion can take place.

Local media has mentioned that Lalanne, as well as the Minister for Employment, are to be recalled to the National Assembly over the next few days and will be expected to show representatives the contract signed with Etihad Airways in February 2012 where the EAG paid $45 million for a 40% stake in the airline. Etihad invested in the airline in hopes of being able to restore the Seychellois-based airline back to profitability after they too have struggled.

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On top of this, the redundancy packages that the employees will receive may not be high enough. Antoine Robinson, who is the representative for the local workers union in Seychelles said the following: “Take the cabin crew members for example. Their basic salary is already low, this is beefed up with an allowance, whenever they fly.  We had asked that Air Seychelles consider a six-month package including the allowances. It is sad that this has not been considered. Instead, a three-month package is being offered.”

Moreover, the carrier is also gaining a lot of hostility from their workers. It has been said by the likes of Robinson that workers are being forced to accept whatever severance is being given to them and have not been consulted on the developments of the job cuts. However, Lalanne responded to Robinson’s claims and said that staff who lose their jobs will be helped by the government to find jobs locally so then they are not affected in the long-term by holding jobs fairs over the course of the year.

Another Case of the Etihad Curse?

Photo: Jeremy Dwyer-Lindgren

It can be strongly argued that this again is the case of Etihad’s failings across the board within their carrier. Critics will say that they have had long enough to bring Air Seychelles back to profitability and it has seemed to have failed under their watch. With the six years of EAG being the majority shareholder, they have not achieved the carrier’s goals of regaining profitability, much like with Alitalia and Air Berlin.

This has become the third example in a recent string of bankruptcies and administration-claims that however much money EAG keep investing into these carriers, there doesn’t seem to be any return on investment whatsoever. And it is starting to hurt the pockets of EAG as well. With revenues falling by $400 million between 2015 and 2017, the Group needs to start finding ways of restoring that lost source of revenue.

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Many will say that EAG needs to focus on themselves rather than expanding too quickly and putting airlines under as a result. It is something that EAG will have to look at and make changes rapidly before they have to downsize to the point that they are no longer considered a part of the Middle Eastern Three (ME3). All-in-all, EAG may need to reconsider their investments, potentially downsize their investments and regroup before making any other potential investments that could end up in further bankruptcy for other carriers.