News has emerged that LATAM Airlines is to lay off a further 2,700 employees as it struggles against the financial pressure of the pandemic. The South American airline group will begin dismissing staff for the third time since the pandemic hit after declaring bankruptcy.
LATAM to lay off staff
Unfortunately, news that LATAM is to lay off additional staff, while shocking, is becoming somewhat of a trend. Earlier today, it was reported that at least 2,700 LATAM Airlines employees are due to be dismissed as the airline group fights the COVID-19 pandemic. This figure represents more than a third of LATAM’s existing employees.
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The news comes after the group failed to reach an agreement with its union regarding reduced pay for employees. It says that its salaries are beyond average, suggesting that an easy way to recoup costs would be to bring them down to industry standards.
Despite negotiations, however, the group could not achieve a compromise.
A poor year for financials
This is the third time that LATAM has taken to dismissing staff. Overall, it will have terminated 5,550 contracts this year alone. The first wave of unemployment came in May when the company first declared bankruptcy. At that time, 1,850 employees were dismissed.
A month later, in June, 1,000 personnel were laid off in Chile, Colombia, and Peru. At present, it is unclear from exactly which region staff will be dismissed this time around. To realize the plan, LATAM will begin offering voluntary leave from Tuesday this week. After that, depending on the uptake, it will need to lay off staff.
In a statement shared with Latin America Business Stories, it appears that the latest spate of redundancies was imminent. The CEO of LATAM Roberto Alvo said in June,
“Unfortunately, I cannot promise that we will not continue to shrink the company. We are obliged to downsize because it is going to be a smaller industry for a long time. The industry is going to take three to four years to recover again; many people are going to postpone travels…”
What will it take to keep LATAM afloat?
Thankfully, LATAM is targeting its financial woes from all angles. It is in Chapter 11 bankruptcy, meaning that its currently undergoing a reorganization of its affairs. Layoffs are just one part of its restructuring. It also managed to secure $1.3bn in financing to keep itself afloat on top of a further $900m.
Despite that, its most recent financial records are not too positive. For June, international revenue was down by 97.6% in comparison to the same month the year before. Therefore, LATAM’s worldwide income for the year is down 57.5% overall compared to 2019.
In June, it also flew 98.4% fewer international passengers and 95.1% fewer passengers overall across international and domestic flights compared to June 2019. With any luck, the gradual increase in passenger traffic will only help LATAM. That said, with a backlog of $18bn debt to clear, more cost-cutting is likely before passenger revenue increases.
How do you think LATAM will fare? Let us know your thoughts in the comments.
