May 08, 2020 11:46
Eastar Jet is expected to lay off dozens of workers after a voluntary retirement program drew only around 60 applicants. The troubled budget carrier decided last month to lay off 22 percent of its 1,600 employees, and now its takeover by Jeju Air has been delayed, savings are even more urgent.
According to industry insiders on Thursday, Eastar Jet begged staff to apply for voluntary retirement three times last month, but only 63 applied for the severance package.
The target is to shed 345 workers and 186 non-permanent staff have already been terminated. That leaves another 96 who will have to be laid off.
Eastar Jet's union is in talks with management to minimize the scale of layoffs by accepting company-wide pay cuts, so the redundancies could shrink.
The carrier hopes to complete the layoffs before it is bought out by Jeju Air, which has been postponed indefinitely from April 29 because the coronavirus epidemic delayed due diligence in Vietnam and Thailand. Industry watchers believe the acquisition will be completed by the end of June.
Other carriers could also lay off staff in this unprecedented crisis for the industry because wages are the second highest proportion of fixed costs after fuel.
One airline executive said, "All domestic carriers sent workers off on paid or unpaid leave because that's the fastest way to reduce fixed costs. If earnings don't recover soon, we will have to lay off non-permanent workers first and then start taking voluntary retirement applications from remaining staff."
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