Airlines Crises After Covid

Airlines crises after COVID

The impact of the COVID-19 virus on the world in all areas has reached an unimaginable magnitude, however, many industries are still working due to the flexibility and adaptation of these, such is the case of the food, pharmaceutical, textile industry , among other; But the air industry has faced an extremely hard blow. Before the pandemic was already going through a hard time due to the pilot deficit, now the problem is not only the lack of pilots, but the lack of flights.

The prevention measures and security protocols that have implemented most countries, have represented high costs for airlines due to the purchase of disposable hygiene and safety materials, cancellation of flights, demand low due to the fear that people have of Traveling, many terminals have closed, government restrictions, among others.

In fact, in Medio East airlines the demand has dropped 51%, a loss of 66 billion dollars in GDP and 1 have been lost.2 million jobs as revealed IATA (International Air Transport Association) on Twitter. In addition, the restrictions implemented by countries have represented 5 billion dollars in just three months for these companies.

Air traffic will fall ‘violently and we are working with a drop from 30% to 40% by 2021. The Tourism Passenger will have fewer savings and will postpone his trips and the business is finding other ways of working, ’said the president of the Latam airline for an interview of the newspaper O Globo.

The first executive of Delta Airline also argued about the situation, who said that government restrictions and isolation impacted sales and reduced the projections of the following months by 90%. Another worrying case is that of United Airlines, the large airline that connects through many flights to Latin America with the United States, said that in the last 15 days of March it lost 100 million dollars every 24 hours, because 80% of Flights were canceled only in the first months of the year.

The famous ICF consultant published in a report that Latin American airlines would be the most affected, because it is the sector where the industry is weaker, it also predicts that the Latin American airline industry will take to recover from this recession in six years, while the rest of the world four.

Airlines such as Copa Airlines and Air France have already announced that flights will resume in the months of June and July respectively, while others are still in uncertainty when their operations will resume.

On the other hand, the IATA gave a statement to Latin American governments to avoid deepening the failure of airlines (due to the closure of borders and isolation). Juniac, the general director, said “passenger traffic has stopped and income flows have been exhausted. Even if there was a demand for trips, governments’ restrictions would make it impossible to operate. No cost cut will save the airlines from a liquidity crisis that is imminent and will be severe. Governments must act immediately ”. In addition, IATA requests were:

“IATA asks governments to consider the following relief measures: 1. Direct financial support to passenger carriers and air loading to compensate for the fall in income and lack of liquidity due to travel restrictions as a result of COVID-19. two. Loans, Loan Guarantees and Backing for the Corporate Bonds Market for Governments and Central Banks. The corporate bond market is a source of vital financial support, but it is necessary. 3. Fiscal relief. Refund taxes on salary payroll paid to date and/or extension of payment deadlines for 2020, next to the temporary exemption of the rates of air bills and other encumbrances applied by governments ”.

The measures to help governments airlines in European countries and the US has been more friendly, in Germany the government implemented a package of aid valued in 9.000 million euros and buying 20% ​​of the shares, in addition to having granted a loan of 3.000 million euros for the State Development Bank. In Italy the government rescued the airline Alitalia from bankruptcy investing 3.000 million euros; In Colombia the government bought actions from the Avianca airline (although its ability to maintain operations is still in doubt); In the United States the largest airlines such as American Airlines, Delta, Southwest, United, among others, managed to sign with the government a 25,000 million dollars support plan.

Some measures that the airlines have taken to preserve the loyalty and customer satisfaction are: Copa Airlines granted vouchers of tickets purchased in April or before by a travel certificate plus 20% of its value, it has also offered community flights for people for people stranded in countries outside the country of residence; American Airlines was associated with UNICEF to combat the effects that pandemic is causing in the most needy countries in Latin America with drinking water, health kits, hygiene and safety articles, provided to health personnel, families and especially children in The communities, the Vice President of American Airlines said “supporting the communities we serve is at the center of everything we do in American”, in addition this airline was the first to take security measures on their flights and decided to voluntarily cancel 95% of its flights due to the exponential growth of cases in New York.

On the other hand, in American Airlines 39.000 of the employees and collaborators voluntarily accepted the suspension of their payrolls or casualties incentivized due to the loss of 2,241 million dollars to which the company has faced and the loss of 56% of the value of their shares; In addition, hiring froze. The company’s executive president said: ‘We have a lot of difficult work ahead. And although there is still uncertainty about what is to come, we trust that through the dedication of the American Airlines team and our rapid actions we will overcome this with our team, our clients and our shareholders ’.

Other airlines such as Lufthansa struggle to maintain most possible jobs, however to achieve that, salaries have temporarily reduce 50%, at least while getting a credit program by the government. British Airways also does everything possible to keep its collaborators, however 42 thousand people must fire due to liquidity problems, among these 4.300 pilots; But he announced that he would fight for every position. Southwest said that the support he will receive from the government is aimed at preserving most possible jobs.

Regarding the participation of preventing the infections from spreading, in all airlines the staff has adopted a comprehensive and flexible attitude to the use of masks, gloves, antibacterial gel, obeying social distancing and communicating health education to passengers to passengers.

Effects of COVID-19 on the Employee/Employer Branding

How was the Employee/Employer Branding affected?

Due to the low sales that airlines are faced and the high fixed costs that must be covered are forced to make cost cuts, mainly human resources; Of course the contractions froze and the attraction of personnel is the last thing they plan to do to recover their profitability or in any case, cover fixed costs. Therefore, the Employer Branding to attract staff would not be a strategy that the airlines will adopt during the pandemic, but to maintain a good reputation in the market (although the investment in ATL is a luxury that very few airlines can occur).

However, in the most difficult times it is when the employee branding is more useful. Keep employees motivated and that they feel empathy for what the company is happening will facilitate organizational administration and development, promote what happens will continue to be an important part of the company not only stimulates people but creates an comprehensive attitude Faced with the decisions that the company has to make, and also increases its willingness to give the maximum of them. The measures that American Airlines and Southwest have taken as to their staff have been very successful, the fact of fighting for the preservation of each position moves employees and now more than ever they can see how the values ​​of the company align their actions and that resonate more consistency than ever.

Post COVID-19 recommendations

The demand for flights is lower than ever, so this is the right time to maintain reputation and a good perspective for the market, mainly to attract internal customers and at the time this recession is stabilized and airlines can return To their operations the most qualified people and related to corporate mission and values ​​wish to collaborate with them.

Airlines must demonstrate to their employees and clients that they join the fight against the spread of COVID-19 and that despite the circumstances, human values ​​are first, collaborating with foundations, NGOs, associations that are helping the staff of the staff of Health, to people in need, working to revitalize the economy, among other actions. The message of American Airlines when joining with UNICEF was emotional and clear for its clients and employees.

Transmit the message of union despite the distance, and that they are struggling to keep as many positions possible. Making employees feel part of the company and giving them that feeling of belonging makes them empathic with the company. The decision made almost 40.000 American Airlines collaborators of voluntarily cease payrolls is a clear example of the empathy that employees felt because of the difficult situation of profitability that was happening, American Airlines made them feel part of the company until the end.

Implement non -monetary incentives to employees, from those who are working from home to those who continue to mobilize so that the company remains standing until the end. Foster the value of union and hope.