(Updated Aug. 17, 9:35 A.M. EST with details on Airlines for America.)
Reflecting the financial distress of its airline members in the midst of the coronavirus pandemic, the International Air Transport Association is planning to reduce its worldwide staff by a fifth, a source at the trade association said.
IATA represents nearly 300 airlines operating scheduled and non-scheduled air service.
Airlines around the world are expected to lose $84 billion in 2020 and are slashing hundreds of thousands of people from payrolls. Airlines have made radical cuts to discretionary expenses in a desperate effort to preserve cash. The savings initiatives include membership dues, forcing the largest airline trade association to reduce its workforce.
“IATA has been impacted by the crisis. Early on, our senior management took voluntary pay cuts and we drastically reduced our spending. As the crisis has dragged on, we are also evaluating further steps to reduce costs, including actions impacting staffing levels, starting with voluntary redundancies,” an IATA spokesperson said in a statement provided to FreightWaves.
IATA employs about 1,600 people worldwide. It plans to eliminate about 20% of its jobs, or 400 people, with some sort of announcement likely at the end of August, the source said.
Airlines have canceled more than 7.5 million flights so far because the coronavirus destroyed travel demand. They are still only operating at about 15% of normal flight schedules as more travel restrictions are lifted. IATA estimates airline revenues will be more than $420 billion below last year’s level.
About 400,000 airline workers have been fired, furloughed or told they may lose their jobs due to the coronavirus, according to a recent analysis by Bloomberg. The figure doesn’t include many others who have taken voluntary unpaid leave in hopes of having a job to return to in the future.
In the U.S., American Airlines, Delta Air Lines, United Airlines have notified about 75,000 employees their jobs could be eliminated when emergency federal payroll support expires at the end of September. Airlines and unions are lobbying for a six-month extension of the program, but the ongoing stalemate in Congress over a broader economic bailout makes any airline rescue unlikely now.
Airlines for America, which represents 10 domestic passenger, express cargo and all-cargo airlines, has taken its own steps to reduce costs, including a hiring a freeze, compensation reductions at the vice president level and above, stopping capital expenditures for the remainder of the year and a reduction in consultant fees.
“These actions provide an immediate reduction in dues and provide relief from immediate cash requirements for our members,” spokesman Carter Yang said.