Around 2,000 employees at Hawaiian Airlines have been given notice of layoffs come October. Although both the CEO and employee unions insist that the warning notice does not automatically mean all 2,000 staff will be laid off, the airline will have to make significant cuts in order to survive. Currently, 35% of all flight attendants and 25% of the airline’s pilots are at risk. The airline issued the 60-day Worker Adjustment and Retraining Notification (WARN) notices as required by law earlier this week.
WARN notices
The airline’s window for applying for leave and early retirement schemes closed on Tuesday of this week. Just 8% of employees took up the offer, not enough to save their colleagues from potential cuts. Hawaiian Airlines CEO Peter Ingram has spoken to local media to say that “It doesn’t mean we are laying off 2,000 people. We have discussions underway to design voluntary separations, early retirement for people who may be ready for a transition.”
However, the airline’s revenues are down 90% compared to last year. Ultimately, the airline will likely have to make cuts in order to survive. According to the pilot’s union, the airline will have to furlough around 230 of the airline’s current 850 pilots. Approximately 6,300 of the airline’s employees are unionized. The airline has said that union staff may be recalled if the carrier grows while non-union staff, around 1,300 employees, will face permanent layoffs.
A smaller operation
Hawaiian Airlines is now looking at a long-term shrinking of its existing operation. The airline reported a daily cash burn of $3.3 million in the second quarter, with an overall quarterly loss of $107 million. The result is that by next summer, the airline expects to be around 15% to 25% smaller compared to 2019.
With a smaller operation, the airline cannot support the same number of staff, hence the layoff notices. The airline is currently one of the biggest employers on the island, with over 7,400 staff. Consequently, the airline is crucial to the island’s tourism industry. Before the virus outbreak, Hawaii welcomed over 35,000 passengers every day. Now, just under 3,000 are arriving daily, and according to the Hawaiian Tourism Authority, fewer than 600 are visitors.
Bankruptcy again?
Hawaiian Airlines has already survived two potential bankruptcies. The airline filed for bankruptcy in 1993 and again in 2017. Yet despite these previous difficulties, CEO Peter Ingram confirmed this was the companies greatest challenge but insisted that the airline was nowhere near filing for bankruptcy again.
Although Ingram seems sure of the airlines, long-term future, it needs restrictions to lift. The Hawaiian governor has extended lockdown measures and travel restrictions across the state. Self-isolation rules for passengers arriving in Hawaii were due to ease at the start of August. However, an increase in new cases on the island has seen the extensions reinforced until September 1st at the earliest. As a result, Hawaiian Airlines has had to further suspend some long-haul flights both to mainland US and internationally.
If restrictions in Hawaii and across the US do not lift soon, the airline may be in more trouble than it reckons. Avoiding layoffs will become increasingly difficult as demand remains low. Although the airline may want to avoid permanent layoffs, the fate of employees may not be in the airline’s hands.