Airlines’ face bankruptcy as cash reserves run out

• Workers’ fate uncertain, job losses loom

There are indications that Nigerian carriers are at the brink of bankruptcy following COVID-19 pandemic as airlines’ cash reserves are fast drying up.

By the end of May-2020, most airlines in the world, particularly Nigerian airlines will be bankrupt. Coordinated government and industry action is needed – now – if catastrophe is to be avoided.

As the impact of the coronavirus and multiple government travel reactions sweep through the world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants.

Already, signs of vulnerability are showing as many airlines have indicated that they would not be able to pay workers’ salaries while others have sent their workers home in what appears to be making the projection of International Air Transport Association (IATA) that the country’s aviation sector would see 125,400 job at risk, see 4.7 million fewer passengers resulting in a $0.99 billion revenue loss, risking.

At the weekend, Chief Executive Officer of Arik Air, Capt. Roy Ilegbodu said after careful deliberation and analyses, management has decided to implement an 80 per cent pay cut for all members of staff across the entire organization for the month of April 2020.

He further disclosed that commencing from May 1st 2020, no less than 90 per cent of staff will proceed on leave without pay until further notice, adding that this position will be reviewed on a monthly basis and communications on further developments will be shared by its Human Resources department as the situation evolves.

“While we are not unaware of the challenges that each and every one of us may face during this difficult period, we join you in remaining hopeful that this ugly situation will abate in the shortest possible time and our organization will come out stronger in the long run.

“We are confident that the steps we are taking now are in the best interest of all and will see us through this difficult epoch in the history of mankind”, he added.

Explaining why the company took the painful decision, Capt. Ileegbodu said a few months ago, it would have been impossible to predict such turbulent and challenging circumstances.

He said of huge significance to them is that they suffered a sharp decline of over 98 per cent in their revenue streams since the suspension of our scheduled flights almost four weeks ago.

He stated that added to this is the rapid decline in the value of the Naira by over 35 per cent against the benchmark and with oil prices now falling well below $15 per barrel, it is evident that they must, without further delay, take decisive action to preserve the organization.

Penultimate week, Nigeria’s oldest airline, Aero Contractors said it will be reviewing its staff April salary by 50 per cent following the suspension of flights due to the COVID-19 crisis.

The Chief Executive Officer of the airline, Capt. Ado Sanusi, in a notice to the staff of the airline, said by the end of April, the minimum some staff would receive would be half salary, to assist in the challenging times.

Some staff of Air Peace,  Dana Air, Azman, Max Air and others lamented over fears of losing their jobs, or their monthly earnings, as they have been either told not to expect full salaries, or any salary at all by the end of the ‘Black April’.

Wole Shadare