Impact of COVID-19: Arik Air adopts 80% salary cut for staff

… as local airline forces 90% of staff to proceed on unpaid leave til further notice

This is not the best of times for workers in Nigeria in particular and the world at large as the Impact of the COVID-19 pandemic continues to take its toll on the fortunes of companies thus forcing many of the companies to embark on cost saving measures.

Top on the list of such cost cutting measures include salary cuts and ultimate retrenchment. Arik Air which is one of Nigeria’s major airlines had earlier disclosed that it might right size in few weeks.

But few days after the exposé, the management of Arik Air issued a mail to all workers that it has implemented 80% salary cut for its personnel for the month of April.

That is not all. The airline also ordered 90% of its 1,800 staff to proceed on leave without pay until further notice. This was disclosed in an email signed by the Chief Executive Officer of the airline, Captain Roy Ilegbolu, and sent to all staff yesterday. It stated that the suspension would be subject to monthly review.

Recall that it had earlier been reported that the airline had told the workers that it could only pay them half of their salaries.

A manager in the airline, who prefers anonymity, revealed that the management had told all workers across the nation that it would slash salaries for obvious reasons.

He said, “It was so sad when we were informed. Nobody planned for what happened and we have no other choice but to re-strategise in order to make ends meet.

“The plan of the airline is to right-size the workforce. Information I got from Lagos confirmed that about 50% of the workforce may be forced to resign and that is more devastating than slashing salaries due to lockdown.”

Why it matters: A source in Arik Air said that Ilegbolu stated that the global economic crisis triggered by COVID-19 pandemic and that has affected the world, creating uncertainty and Nigeria is not isolated from that development.

Ilegbolu said in the mail, “After careful deliberation and analyses, management has decided to implement an 80 per cent pay cut for all members of staff across the entire organisation for the month of April 2020. Furthermore, commencing from May 1st 2020, no less than 90 per cent of our staff will proceed on leave without pay until further notice. This position will be reviewed on a monthly basis and communications on further developments will be shared by our HR department as the situation evolves.

“With the current observed trend of events, it is prudent to lean on the assumption that the situation is likely to persist for a while longer.”

“Of huge significance to us is that we have suffered a sharp decline of over 98% in our revenue streams since the suspension of our scheduled flights almost four weeks ago. Added to this is the rapid decline in the value of the naira by over 35% against the benchmark and with oil prices now falling well below $15 per barrel, it is evident that we must, without further delay, take decisive action to preserve our organisation.”

According to the Arik boss, the focus of the management has always hinged on the well-being and safety of the staff, managing liquidity as an organisation and creating the opportunity to ride out of inclement circumstances such as the one it is faced today.

To further cut cost, Arik has reached out to its suppliers, specifically negotiating reduced rates on all contracted services and mitigating operational expenses due to changes in demand. It has also implemented contingency plans for staff and introduced operational support flexibility.

Ilegbolu added that the outlook for the near future is not encouraging, and that the airline’s current level of business simply cannot support its operations for much longer.

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