COVID-19 continues to hurt aviation, prompts Cebu Pacific to trim workforce by 25 percent

MANILA, Philippines—Cebu Pacific, the country’s largest budget airline, is reducing its workforce by 25 percent as it navigates a business environment dramatically reshaped by the novel coronavirus (COVID-19) crisis.

Charo Logarta Lagamon, Cebu Pacific director for communications, told the Inquirer on Wednesday (July 8) that over 800 employees across the group will be laid off by August this year on top of some 200 tenured workers who had agreed to retire early last month.

This is the second wave of layoffs at Cebu Pacific, which confirmed a “right sizing” program involving its 4,000 employees last June 23 but gave no details.

The job cuts remain among the largest this year in domestic aviation, which continues to reel from COVID-19’s impact in the Philippines and around the world.

“This is a difficult but necessary decision for CEB [Cebu Pacific] in order to fulfill its long-term commitment to provide affordable and accessible air transport services to the public,” the company said in a statement.

“Rest assured that this process was undertaken with utmost transparency, sensitivity and responsibility to all CEB stakeholders,” it added.

The layoffs also come as the budget airline reviewed and redefined its long-term plans due to rapid changes in business conditions.

“It was clear after this process that CEB was too big for the operational requirements and expected new norms in the industry,” Cebu Pacific said in its statement.

Moreover, limited COVID-19 testing and different regulations among local governments also prevented domestic airlines from increasing flights. The recent surge in coronavirus cases has placed the Philippines second to Indonesia with the most infections in Southeast Asia.

Since restarting regular operations on June 2 after strict lockdown measures were lifted, Cebu Pacific said current flights accounted for just 10 percent of its pre-quarantine network.

“When it was clear that the rebuilding of the network and operational restart was slower than expected, tenured employees were given the option to voluntarily separate from the company,” Cebu Pacific said.

The company took earlier steps to reduce expenses as business prospects dimmed. Cebu Pacific management took pay cuts while new hires, promotions and salary adjustments were suspended. Work schedules across the entire organisation were also reduced.

Last May 14, Cebu Pacific said it will slash capital spending, mainly for the acquisition of new planes, by over 50 percent this year.

Cebu Pacific, a pioneering budget carrier launched by the Gokongwei family in 1996, has a fleet of 76 aircraft that served over 100 local and international routes before the pandemic. It was planing to expand its fleet with 61 next-generation planes until 2026.

Similar expansion plans across the industry are on hold with aviation experts saying full recovery would come in two or three years.

The layoffs at Cebu Pacific will add to over 2,150 aviation jobs lost since February this year. This includes 300 workers at Philippine Airlines, 1,400 at 1Aviation Groundhandling Services Corp., and 260 at AirAsia Philippines.

Cebu Pacific laid off an initial batch of 190 newly-hired cabin crew members last March.

Cebu Pacific said in its statement on Wednesday the retrenchment package went above the requirements of Philippine labor laws.

This included one-month tax-free basic salary for every year of service, tax-free gratuity pay equivalent to one-month basic salary, health coverage for the rest of the year, pro-rated 13th month pay and conversion of unused leaves and two round-trip tickets to any destination.

“CEB understands the potential difficulty to find employment at this time,” the company said in its statement.

“Together with JG Summit, CEB will assist affected employees by connecting them to opportunities across the conglomerate. Outplacement sessions and malasakit transition programs will also be made available,” it added.

TSB