Thai AirAsia (TAA) has announced mass lay-offs and extended furloughs after struggling with the impact of the Covid-19 pandemic despite the country’s reopening on Nov 1.
Quoting Tassapon Bijleveld, the executive chairman of Asia Aviation, the largest shareholder of TAA, the Bangkok Post reported on Friday (Nov 19) that the real situation in terms of the aviation outlook remains unstable, prompting the company to reduce its fleet size for next year and consequently reduce its workforce to maintain financial stability over the long run.
Bijleveld said even though the carrier had negotiated with suppliers and banks to help offload aircraft leasing costs, and may get additional liquidity after restructuring this month, its balance sheet cannot be strong enough if those expenses still run.
“We have to permanently cut the fleet for at least two years or until international and domestic flights fully recover,” he said.
The Bangkok Post said TAA announced on Monday that its fleet size would be cut from 60 to 54 as revenue from international routes is still limited due to different reopening policies from country to country.
Tassapon added that the airline already bottomed out in the third quarter, and it estimated that the domestic market should fully recover by mid-2022, while international flights might gradually return to 20% to 30% of 2019 levels.
The best-case scenario for international routes is that TAA resumes 50% of pre-pandemic scheduled flights by the end of next year.
Bijleveld said while it was hurtful to take such a decision, it was based on the reality which cannot be answered as to when the situation will improve.
“We have to wait until revenue from international routes comes back and that will depend on the entry regulations of Thailand and overseas destinations,” he said.
According to the report, TAA is deciding on the number of lay-offs this week and will announce the list of employees to be laid off by next week. The company is also launching an early retirement programme for those who are willing to leave.
TAA and six other airlines in the country submitted a proposal to the government in April 2020, asking for soft loans to help sustain jobs for over 20,000 employees, following the impact of the first nationwide lockdown in the second quarter of that year.