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RwandAir cuts 65% off staff salaries to prevent loss

Most staff who spoke on condition of anonymity said they were shocked by the decision and are badly devastated. Most of the employees are currently servicing loans and mortgages worth millions.

Uncertainties resulting from COVID-19 pandemic lockdown have pushed Rwanda’s national carrier, RwandAir to impose stringent measures saying it wants to avoid sinking into massive losses.

“Management has come to a difficult but necessary conclusion that, in order to maintain the current workforce, more stringent measures are required to avoid suspending all employment contracts from this April due to the pandemic,” RwandAir says in a leaked internal notice dated April 24.

According to this leaked document headlined as ‘Notice to All Staff’ signed by Yvonne M. Makolo, the Chief Executive Officer, the new measures are urgent and difficult but aimed at cutting costs to decrease company expenditure and protect the future wellbeing of the company.

Details in the memo indicate that the company has decided to cut between 8% to 65% off salaries (net) of employees.

The lowest paid employee will be subjected to 8% cut while the highest will forego a whopping 65% cut off.

“This was an extremely tough decision and we understand the impact it will have on you and your family, however, please know that we considered several other alternatives and the choice we made is the best option at this time,” the statement reads in part.

RwandAir had earlier implemented a forfeiture of net salary by CEO, DCEO and all Directors for the month of April. It had also extended the suspension of pilot employment contracts.

The company had also effected a suspension of non-essential contracts until further notice. Under the previous measures, the carrier had instructed for a re-negotiation of terms to reduce company expenditure and financial commitments.

Extra measures in the statement show that the company had suspended all allowances including communication allowances, with a few exceptions. It also instructed the employees to utilise annual leave during the suspension period.

These tough measures have also poked holes into pockets of a particular section of staff. The company has ordered the alignment of outstation staff salaries to the local payroll (Country Managers to be paid as Senior Managers, Station and Sales Managers to be paid as Managers and Station Officers as Duty Managers).

The company described the current situation as “uncertain times” and that the measures and more underway are aimed at safeguarding the future of the company.

Most staff who spoke on condition of anonymity said they were shocked by the decision and are badly devastated. Most of the employees are currently servicing loans and mortgages worth millions.

RwandAir is the first company to take drastic measures that have directly affected its employees as result of the effects of the pandemic, but same tough decisions have taken by other airlines globally.

Highlights in other airlines:

  • Virgin has laid off more than 3000 people including 600 pilots;
  • Finnair has returned 12 planes and laid off 2,400 employees;
  • You grounded 22 planes and fires 4,100 people;
  • Ryanair grounded 113 planes and gets rid of 900 pilots for the moment, 450 more in the coming months;
  • Norwegian Air said it will temporarily lay off more than 5,000 of its employees and return 787s to the lessors;
  • SAS has returned 14 planes and laid off 520 pilots;
  • The Scandinavian states are studying a plan to liquidate Norwegian and SAS to rebuild a new company from their ashes;
  • Ethiad cancelled 18 orders for A350, grounded 10 A380 and 10 Boeing 787 and laid off 720 staff;
  • The Emirates grounded 38 A380s and cancelled all orders for the Boeing 777x (150 aircraft, the largest order for this type). They “invited” all employees over 56 years to retire;
  • Wizzair returned 32 A320s and laid off 1,200 people, including 200 pilots, another wave of 430 layoffs planned in the coming months. Remaining employees will see their wages reduced by 30%;
  • IAG (British Airways’ parent company) has abandoned the takeover of Air Europa (and will pay €40 million compensation for that);
  • British Airways and Iberia parent IAG is considering accelerating the retirement of 30 aircrafts;
  • British Airways has reached a deal to temporarily suspend more than 30,000 of its cabin crew and ground staff;
  • Luxair has reduced its fleet by 50% (and associated redundancies);
  • CSA has abolished its long-haul sector and kept only 5 medium-haul aircraft;
  • Eurowings has gone into bankruptcy;
  • Brussels Airline reduces its fleet by 50% (and associated redundancies);
  • Lufthansa will also reduce the group’s total fleet, disposing of 40 out of its 763 aircraft;
  • Hop is studying the possibility of reducing fleet and staff by 50%.

Additional info:

Currently 60 new aircraft are stored at Airbus with no buyers in sight (order cancellations) including 18 A350s. They forecast a minimum of 8,000 grounded planes by September. With an average of 5.8 crews per plane (medium and long haul combined), that would make more than 90,000 unemployed pilots worldwide.

Source: Taarifa

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