Arik Air, one of Nigeria’s major airline companies has ordered 90% of its staff to go on leave until further notice. This is as a result of lockdown that has paralyzed commercial activities in many states in Nigeria, and put aviation transportation to a halt.
The aviation company has also implemented an 80% pay cut for its personnel while the rest of its workforce has been sent on leave without pay.
In March, the federal government announced that all international airports in Nigeria had been shut down to restrict entry of people from countries with high rates of COVID-19. Following the lockdown order that affected the Federal Capital Territory (FCT), Lagos and Ogun States, the aviation ministry restricted local flights as more states implemented a “no flight” rule.
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On Tuesday, Aviation Minister, Hadi Sirika announced that following the extension of the lockdown, airspace and airports will no longer be open for normal activities.
“As a result of the extension on lockdown by Mr. President it is no longer possible for us to open our airspace and airports for normal operations by the 23rd April, 2020. They will remain closed for a further two weeks. This is subject to review as appropriate,” he said.
This development instigated by the coronavirus pandemic has forced Arik to suspend 90% of its staff. But in an email sent to staff, the Chief Executive Officer of the airline, Captain Roy Ilegbolu promised that the decision will be reviewed monthly.
“After careful deliberation and analyses, management has decided to implement an 80 percent pay cut for all members of staff across the entire organization for the month of April 2020. Furthermore, commencing from May 1st 2020, no less than 90 percent 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,” he said.
Ilegbolu said Arik has suffered 98% decline in revenue streams in about four weeks following coronavirus’ spurred economic turmoil, leaving the company with no option than to cut the workforce.
“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 percent 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 percent 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 organization,” he said.
He added that the welfare of staff has always been paramount to the organization, but recent events have made these measures unavoidable.
“Our focus as management has always been hinged on the well-being and safety of our staff, managing our liquidity as an organization and creating the opportunity to ride out of inclement circumstances such as the one we are faced with today.
“Pursuant to this, recently, we reached out to our suppliers, specifically negotiating reduced rates on all our contracted services and mitigating operational expenses due to changes in demand. We also implemented contingency plans for staff and introduced operational support flexibility,” he said.
The CEO noted that Arik Air has managed to preserve its limited resources by taking these measures. He added that more steps will be taken in accordance with unfolding events.
“For this reason, to safeguard the survival of our organization, we are constrained to introduce additional measures to curtail our costs, as dictated by the turn of events,” he added.
More companies in the aviation industry are expected to follow the steps of Arik in the coming weeks as there is no special intervention fund by the federal government for the Nigerian aviation industry. The 50 billion Target Credit Facility of the Central Bank of Nigeria, for businesses and households fall short of what is needed to keep airline companies in business and save people’s jobs.
Aviation companies can only access not more than N25 million from the fund, which is insignificant to the exigencies of the aviation industry.
In many countries around the world where there has been substantial intervention from the governments, airline companies are still struggling to keep their staff. It is believed that the lack of sufficient social intervention programs by the Nigerian government is going to result in more layoff of staff in the coming weeks.