The Jakarta Post
National flag carrier Garuda Indonesia has laid off 180 contract pilots, as well as hundreds of workers as the company continues to struggle financially amid a slump in demand for air travel, its workers association has said.
The pilots, including senior and outsourced pilots working on a contract basis, have had their contracts terminated as the airline cuts back on flights, Garuda Pilot Association (APG) chairperson Muzaeni told The Jakarta Post on Tuesday.
“There are a total of 180 pilots affected, of which 150 are contract workers sourced internally, mostly retired seniors aged 60 to 65 years old,” Muzaeni said in a phone interview. “The other 30 are externally sourced contract workers.”
The move followed a previous announcement from the airline that it had furloughed about 800 workers for three months starting on May 14 in a bid to maintain the company’s finances before resuming normal operations.
The COVID-19 outbreak has forced Garuda to park 100 of its 142 aircraft as its daily flights have dropped 70 percent because of the government’s large-scale social restrictions (PSBB).
Consequently, in the first quarter of 2020, the airline recorded a 31.9 percent annual drop in passenger and cargo revenue.
APG said the laid-off pilots had their rights fulfilled by the company.
Muzaeni also said that in addition to the layoffs, Garuda had offered early retirement packages with added benefits for existing senior employees.
“The company is offering early retirement packages for employees who are over 50 years old. The package is worth about 35 times monthly wages, more than the usual retirement package, which is worth 30 times monthly wages,” he said.
Garuda Indonesia president director Irfan Setiaputra acknowledged the layoffs in a press release on Tuesday, while stating that the company had fulfilled its obligation to the affected pilots.
“We have been forced to terminate the contracts of our workers in order to align our workforce with the demand for our flight operations, which are significantly affected by the pandemic,” he said.
“It was a tough decision to make. However, we believe that Garuda can improve its operational condition and survive these challenging times,” Irfan added.
Previously, Garuda Indonesia took several measures to maintain cash flow amid plummeting demand for air travel. The measures included cutting employee and executive salaries, cutting production costs for efficiency and renegotiating obligations to partners and aircraft lessors.
Garuda Indonesia booked US$3.25 billion in short-term liabilities last year, including $498.9 million in sukuk (sharia compliant bonds), according to its 2019 financial report.
As the company struggles to stay afloat, the government is set to give Rp 8.5 trillion ($597.6 million) in a working capital guarantee for the airline as part of the economic recovery stimulus package to stave off the impact of the pandemic, including on ailing state-owned companies.