Current Affairs Czech Airlines announces massive layoffs
The Czech Republic’s national carrier Czech Airlines has announced layoffs in an effort to keep the troubled company afloat. The airline will let go around one third of its staff including dozens of pilots and stewards and ground personnel. The move has spurred concerns over the future of the carrier which some say could never recover.
The company says the move, unanimously approved by its board of directors earlier this month, had been planned since the spring when ČSA decided it was going to sell off six of its 15 Airbus aircraft.
The decision was hastened by losses Czech Airlines registered on the Russian market in the wake of the ongoing crisis in Ukraine. But grounding its Airbus fleet has led to operating profits the firm achieved in six consecutive months this year, a result the company’s wants to maintain, says ČSA spokesman Daniel Šabík.
“If we kept our entire A320 fleet and had to maintain them without having a reasonable use for them, we would not be able to achieve any operating profit. So this move should ensure that Czech Airlines will have an operating profit throughout the entire year.”
Last year, ČSA posted a loss of 922 million crowns, the worst result in four years. The South Korean carrier Korea Air eventually bought a 44-percent stake in Czech Airlines, after several thwarted attempts by the government to sell the company.
The South Korean airline also gained an option for a further 34-percent stake in the firm but it has announced it is going to transfer that option to the Czech charter company Travel Service in November. This means the Czech state is set to give up a majority in the national carrier.
The timing of the layoffs has led to concerns about a looming end of Czech Airlines, a company with more than 90-year-old tradition. Prime Minister Bohuslav Sobotka told reporters on Wednesday he did not like the move, and suggested the privatization, concluded under then prime minister Petr Nečas, has weakened the company.
But analyst Tomáš Menčík from the consultancy firm Cyrrus says that letting go of one third of the staff is necessary for Czech Airlines to survive.
“I don’t think they are going to go under. I believe that finding strong partners, Korean Air and Travel Service, was a crucial move to save the company in the long term. I think the latest decision is in line with what they need to do in order to survive.”
The trade union of Czech Airlines pilots however says that cutting jobs goes against the terms of the company’s privatization, and asked the shareholders to reverse it. Czech Airlines stewards have meanwhile gone on strike alert, and said further steps would be announced on Thursday.