Almost 5,000 Thai Airways International employees have signed up for the company's early retirement programme, as concerns mount over the airline's ability to reduce its operating costs to match falling revenues.
The scheme had been welcomed by employees, almost 5,000 of whom have applied, the airline's acting president, Chansin Treenuchagron, said on Thursday. Applications for the scheme closed on Oct 28. Employees whose applications were approved will receive severance checks equivalent to 2-14.33 months of pay, depending on their position, in addition to other benefits.
The airline's furlough programme, meanwhile, will run from Nov 1 to April 30. The programmes were among the ailing flagship carrier's efforts to turn its balance sheets around.
Earlier this month, THAI announced that despite the fact that 80% of its 19,000 employees had agreed to pay cuts or go on unpaid leave, the financially-struggling airline only has enough financial reserves to last until December. As of the end of June, the company's debts stood at 332.2 billion baht. Its debt rehabilitation was approved by the bankruptcy court on Sept 14.
Mr Chansin said the early retirement programme had allowed the company to meet its workforce reduction target. On Thursday, he thanked participants of the scheme, saying they would help ensure the airline can stay in business. Now, he said, the company's focus was to come up with a payout plan, as it didn't have many cash reserves and couldn't take out loans.
Meanwhile, an International Air Transport Association (IATA) analysis showed the airline industry will not be able to slash costs enough to allow the sector to avoid bankruptcies and mass layoffs next year. The IATA reiterated its call on governments to roll out relief measures to allow financially stressed airlines to survive and avoid mass terminations.
In its report, IATA said pre-flight Covid-19 tests would be enough to replace mandatory quarantine, as it prodded governments to reopen more international flights. The industry's total revenues next year are expected to be down by 46% compared to last year's figure, which stood at US$838 billion (26.18 trillion baht). IATA expects the traffic figures for this year to be down by 66% compared to last year, with demand for December projected to be down by 68%.
The industry's recovery has been delayed owing to new outbreaks of Covid-19, which forced governments across the globe to mandate new travel restrictions, including further border closures. Although airlines have taken drastic steps to reduce costs, only about 50% of airlines' costs are fixed or semi-fixed, at least in the short-term. The result is that costs have not fallen as fast as revenues. IATA said that about 60% of the world aircraft fleet was leased. While airlines have received some relief from lessors, rental costs have dropped less than 10% over the past year.