The Jakarta Post
National flag carrier Garuda Indonesia has decided to furlough around 800 contract workers for three months starting May 14 as the airline struggles to stay afloat amid the COVID-19 pandemic.
Garuda Indonesia president director Irfan Setiaputra said the measure was a hard decision that needed to be made to help ensure the airline’s sustainability before it resumed normal operations.
“We have made this decision after thorough consideration by taking into account the employees and the company’s interests and to avoid layoffs,” he said in a statement on Sunday, adding that the decision had been discussed between the employer and the affected employees.
During the three-month period, the furloughed employees will still get their health insurance and Idul Fitri bonus, Irfan stated.
The COVID-19 outbreak has forced Garuda to park 100 of its 142 aircraft while its number of daily flights has declined 70 percent compared to normal days as people stay at home to avoid contracting and spreading the virus. In the first quarter of 2020, the airline recorded a 31.9 percent annual drop in passenger and cargo revenue.
Previously, Garuda Indonesia took several measures to maintain its cash flow amid the plummeting demand for air travel caused by the outbreak. The measures include cutting employees' and executives' salaries, cutting production costs for efficiency and renegotiating obligations to partners and aircraft lessors.
The airline also opened discussions with holders of its US$498.9 million in sukuk due on June 3 as the company struggles to pay its dues.
Aviation observer Gerry Soejatman estimated recently that national airlines would continue to reduce their capacity and services in the next several months to avoid bankruptcy, especially as recovery in passenger demand would take a long time.
“In the meantime, airlines need to be very careful in maintaining their cash flow to survive until the passenger demand returns to normal,” he said.