Around one-third of TAP Air Portugal’s workforce is set to lose their jobs under a 3.4 billion-euro ($4.1 billion) rescue package unveiled by the Portuguese government on Friday. This rescue package for the Portuguese national flag carrier will mean that around 3,500 people could lose their jobs.
The plan, which will require approval from the European Union authorities in Brussels, also sees that those remaining employees who will still be on the airlines’ payroll take a 25% cut to their wages. If the plan gets the go-ahead from Europe’s top politicians, it will mean that 500 pilots, 750 cabin crew, and 750 ground crew will be let go. On top of this, 1,600 employees on short-term contracts will not have their contracts renewed. The airline’s current fleet of 108 aircraft will also shrink to a more manageable 88.
Passenger numbers are down 70%
The Portuguese government who already owns 72.5 % of the national airline, predicts that even with the cuts, TAP Air Portugal will lose 6.7 billion euros ($8 billion) in revenue through 2025.
As a direct result of the COVID-19 global pandemic, the Lisbon-based airline lost more than 700 million euros ($849 million) in the first nine months of this year, with passenger numbers plummeting more than 70% when compared to the same period in 2019.
Truth be told, even before the coronavirus crippled the airline industry, TAP Air Portugal was already in trouble and would have had to file for bankruptcy without government aid. According to the Washington Post, Infrastructure Minister Pedro Nuno Santos referred to this at a recent news conference.
TAP is not the only airline taking similar steps
Despite TAP Air Portugal being one of Europes smallest airlines, its fate is not a big talking point in Lisbon, with the country’s minority Socialist government struggling to contain the ongoing medical emergency after a bruising battle in parliament to pass its 2021 budget.
This latest plan for the embattled airline is far from over, even if the politicians in Belgium give it the green light. It is sure not to go down well with the unions representing the airlines nearly 10,000 employees.
The restructuring plan still has ten days to go before it needs to be presented before the European Union and will see the airline’s hierarchy meet with Union leader on Wednesday to discuss the 3.4 billion euro bailout.
TAP needs to shed jobs
Just about all of Europe’s major airlines have had to call for government aid during what has been the most disastrous year on record for the airline industry. If truth be told, TAP Air Portugal has been flying on borrowed time even before COVID-19 became an issue. Like many state-owned airlines, TAP is bloated with staff and needs to become leaner if it hopes to compete with privately-owned carriers.
The cuts are long overdue and necessary if TAP Air Portugal is to survive and return to profitability.
TAP Air Portugal is a Star Alliance member that flies to more than 80 destinations in 30 countries and is mainly focused on former Portuguese colonies and North America.
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