The Jakarta Post
Privately owned Lion Air Group has laid off 2,600 contract employees at its subsidiary airlines Lion Air, Wings Air and Batik Air amid declining flight traffic, an official has said.
The group’s spokesperson, Danang Mandala Prihantoro, told The Jakarta Post Thursday that the management had decided not to extend the work contract of the 2,600 employees, which accounted for around 9 percent of the company’s total workforce.
“Our [permanent] employees are not being terminated. We downsized our workforce by terminating our contract workers,” he said via text message.
In an official statement, Lion Air Group said it was currently operating at just 10 to 15 percent of its normal capacity of between 1,400 and 1,600 flights per day, which had battered the company’s finances.
“The COVID-19 pandemic has put the airline industry in a state of coma. Meanwhile, the company still needs to pay large expenses, which creates a great challenge for us,” the statement reads.
Besides terminating contracts, the company’s employees and management board have had their wages cut since March until further notice.
“We need to make the difficult decisions to ensure our business survives through operational downsizing, cost reduction and organizational restructuring amid the current airline industry situation that hasn’t return to normalcy,” the statement added.
Lion Air is the latest airline to announce employee cuts. In June, Garuda Pilot Association (APG) chairperson Muzaeni told the Post that national flag carrier Garuda Indonesia had laid off 180 contract pilots as the company was struggling financially amid the slump in demand for air travel.
The COVID-19 outbreak has forced Garuda to park 100 of its 142 aircraft as its daily flights dropped 70 percent due to the government’s large-scale social restrictions (PSBB). Consequently, the airline recorded a 30.1 percent annual drop in its total revenue in the first quarter, the company’s financial report shows.
The International Air Transport Association (IATA) also estimated that Indonesia’s aviation industry would suffer a 49 percent passenger drop and an $8.2 billion fall in revenue this year compared to last year.