Cebu Pacific announces layoffs as local flights grounded due to COVID-19

MANILA, Philippines — Cebu Pacific, the country’s largest budget airline, is letting go of over 150 cabin crew members on Thursday as the COVID-19 pandemic forces it to ground all domestic flights by March 20 this year.

Charo Logarta Lagamon, Cebu Pacific director for communications, confirmed a report by CNN Philippines that the company is laying off newly-hired flight attendants who have yet to be regularized.

A company source, however, estimated that more than 190 cabin crew would be affected by the job cuts. Cebu Pacific has about 4,000 employees, half of which are cabin crew.

Lagamon said the layoffs were due to the significant drop in the budget airlines’ regular operations as demand for air travel vanishes and countries put up travel bans.

Those problems confront the rest of the aviation sector as COVID-19 continues to spread around the world. To date, the respiratory disease has infected more. than 160,000 people and killed over 6,000 in more than 140 countries.

With revenues drying up, the industry is turning to cost-cutting. Last month, Philippine Airlines reduced its workforce by 300 ground-based staff while affiliate MacroAsia Corp. said on Monday it will allow employees to go on unpaid leaves while implementing an early retirement program.

In a statement on Monday, Cebu Pacific called the decision a “painful but necessary action to take to cope with the impact of COVID-19.”

“It is a difficult decision but we are letting go of our newly hired cabin crew because less flights mean less time and opportunity for them to gain inflight experience. Their last day as employees will be on March 19, 2020,” Cebu Pacific noted in its statement.

“We assure everyone that they are treated fairly and have been given packages which are more than what the law requires. We also assured them that if the business picks up hopefully in the very near future, they will be prioritized in the hiring,” it added.

Cebu Pacific, whose senior managers recently took a pay cut, did not detail the termination packages. CNN Philippines reported that those included two months’ salary as separation pay, two free roundtrip tickets, a ticket to their home province or city and waived charges for training bonds, uniforms, and accessories.

The carrier said disruptions caused by COVID-19 “will continue to impact Cebu Pacific for months ahead.”

“As we foresee less flights and reduced operations in the coming months, we will have less requirement for flying staff,” it said in its statement.

As the dominant domestic airline in the Philippines, Cebu Pacific bears the brunt of the one-month suspension of all local flights in Manila’s Ninoy Aquino International Airport. This was after President Duterte ordered a partial lockdown on Metro Manila to help slow the spread of COVID-19.

In a filing to the Philippine Stock Exchange on Monday, Cebu Pacific said the loss of Manila domestic operations as well the suspension of international flights to and from China, Hong Kong, Macau, and Korea affected 90 percent of its seat capacity.

“[Cebu Pacific] anticipates significant revenue impact during this 30-day quarantine period with the suspension of these flights,” the budget carrier said.

Cebu Pacific is bracing for a larger hit to operations as it prepares to cancel all domestic flights from March 20-April 14, an advisory on Monday showed.

Cebu Pacific, owned by the Gokongwei family’s JG Summit Holdings, is so far continuing international operations to destinations such as Australia, Bangkok, Dubai, and Japan. As of September last year, it had a fleet of 72 aircraft.