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Hospitality & Travel

British Airways pilots accept 20% pay cut to end job losses dispute

The pilot union said that there will not be firing and rehiring of pilots.

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British Airways, Delta Air Lines, others to sack employees as Coronavirus hits airline operators' revenue, British airways set to suspend 32,000 employees

The British Airline Pilots Association have announced that British Airways pilots have accepted a deal that will temporarily cut their pay by 20% and limit job losses to just about 270, as against the initial planned 1,255.

This deal has resolved an ongoing bitter dispute between the pilots and the airline, as the carriers attempt to navigate through the global slump in air travel due to COVID-19.

The British Airline Pilots’ Association (BALPA), while disclosing that just over one-fifth of the 1,255 initially planned redundancies will be allowed to go, the terms of the agreement suggest that the pilots will accept an initial pay cut of 20%, which will gradually reduce to 8% over a 2-year period and then phase out entirely in a longer-term.

The pilot union said that there will not be firing and rehiring of pilots. The UK lawmakers had previously been very critical of British Airways over the alleged usage of furlough fire and rehire scheme, a strategy used by companies to force employees to accept inferior terms.

They accused the airline of planning to cut as many as 12,000 jobs and exploiting the coronavirus crisis to reduce staff and weaken the employment terms of those remaining.

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Airlines have been seriously hit by government lockdowns and restrictions that are parts of measures to contain the spread of the coronavirus pandemic.

The hopes of the airlines recovering at the tail end of the profitable summer tourism season seem to have been dashed due to disruptions caused by a new wave of the virus outbreak in many countries, including France and Spain, with new travel restrictions being placed by them.

The International Air Transport Association (IATA), had revealed that a full recovery is unlikely before 2024, which is a year later than it had earlier predicted. The British Airways, while agreeing with this bleak assessment, says that it does not expect the airline to return to pre-COVID-19 business level until at least 2023.

The IAG Group, holding company for British Airways, said yesterday, “Therefore we need to act now to reshape our company for a very different future.”

The company has not received the billions in bailouts that some rival airlines like Air France-KLM and Deutsche Lufthansa received. The assistance they got was only limited to furlough funds to protect jobs and state-backed loans.

Global lockdowns imposed to fight the coronavirus pandemic have negatively affected air travel, thereby putting the future of many airlines in serious doubt.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Hospitality & Travel

COVID-19: Transcorp Hotel loses about N1 billion every month – CEO

Transcorp Hotels has seen its revenues ravaged by COVID-19 induced lockdowns and implementing measures to save itself from further losses.

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COVID-19: Transcorp Hotel loses about N1 billion every month- CEO

Transcorp Hotels, owners of one of Nigeria’s largest hotel Transcorp Hilton reports it loses about N1 billion every month due to the Covid-19 pandemic.

This was disclosed by the Managing Director/CEO of Transcorp Hotel Plc, Dupe Olusola, during an interactive session on Thursday. According to her, the management of the hotel met and decided to ensure that it kept costs down by restructuring its business strategy, diversifying into asset-light business models, and reducing the workforce, among others.

Olusola further disclosed that the company had suspended further commitment to buy fixed assets and operating equipment, as well as reduced its energy consumption and maintenance costs. She also confirmed Transcorp will be cutting back on all capital investments this year and in the foreseeable future until the outlook for the economy improves.

READ: Nigerian hotels count revenue losses due to pandemic-induced plunge

The hospitality sector has been one of the hardest-hit since the Covid-19 broke in late February. Data from the National Bureau of Statistics also reveal the sector contracted by as much as 40% in the second quarter of 2020, officially falling into recession.

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Nairametrics participated in the stakeholder’s session and noted a few critical remarks from the interview.

Below is the excerpt of the interview session:

How much has COVID-19 eaten into the fabric of Transcorp Hotels?

We had a drastic decline of over N9 billion. In March alone, we witnessed a N456 million loss. We have to remember that in March, there was a partial lockdown when everyone was trying to figure out what was happening. We were at N1.03 billion loss in April alone and this has continued to be the story every month. In June, we dropped by about N840 million.

READ: As Hotels resume operations, how prepared are they?

How will this development (loss) affect your staff strength?

We struggled to ensure that we would not ask people to go initially, that was our priority. We paid staff that did not work during lockdown 50% of their salaries and the ones that worked then were paid full salary. To keep the business running, we definitely have to let go of at least 40% now.

We engaged the staff Unions, both the Junior and Senior staff, before the implementation of that. We will ensure that employees are properly taken care of. The occupancies we have now are below 30% and with that, it’s impossible to have everyone around.

What is important to us is that we must ensure we are able to keep the hotel running as a national asset, because it has been in existence for over 30 years.

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We have ensured that we keep as many jobs as we can within this time frame, so this is an opportunity for us to engage the media and carry you along before such exercise. We have engaged actively with our employees and other key stakeholders. At the occupancy level that we are seeing, it is impossible for us to sustain the employees that we have to keep our doors open.

Precisely, how many will you lay off?

It is definitely a great burden to even consider a lay-off but we don’t have a choice but to keep the business afloat. We have over 1,000 staff and it appears we will not need more than 400 staff to ensure we keep the hotel running. What is happening is beyond everybody and it is just a situation we have found ourselves in.

What is your outlook for 2020, any hope of returning to the pre-COVID era?

We expect to get to the pre-COVID era by 2024 globally, because it requires the gathering of the people in preparing for events, etc. The new normal is real. We expect things to go back to what they used to be in Nigeria by 2024 also. We are not expected to do more than 30% of our occupancy this year and that is significantly low, and by this time next year, we don’t expect to see anything more than that. So, this is our trying time.

Strategy to sustain Balance Sheet before the end of 2020

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We are a hotel business, the food, room and the events we hold are our sustainers. We are definitely going to end at a loss in 2020. As I said, COVID will still be around in 2024. We will try as a business to be innovative, to look at different ways. We are reporting losses of almost N1 billion on a monthly basis and this is significant to us. We hope they can come up with some vaccination to help reduce the impact of the pandemic so that businesses can begin to pick up.

READ: Transcorp Hotels Plc Retains Positive A- (NG) GCR Rating

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Any palliatives from the government to hotels?

Governments across the world have given palliatives to hotels, but here there is no such package for big hotels in Nigeria. We have engaged at all levels of government on payroll support, tax rebate, support for employees, actively and widely as possible. Yet, these have not yielded any support, unfortunately. This is really why we have gotten to the point of disengaging our own staff. We have not seen any support from the government to actually help us.

How do you aim to restructure your loans and are there plans to raise funds?

This year is really just about losses. We have met with our stakeholders and lenders to work out how we can restructure our loans, considering some palliatives CBN brought on board like interest rate of 5%. We met the Bank of Industry (BOI) to get interest rates on our loan reduction. Some of these got a couple of positive responses. We are also considering raising funds through the right issues. We are raising N10 billion in order to pay off some of our existing obligations.

How will virtual tools affect your business model and future plans?

We are working round the clock to bring in solutions in line with the new normal to our guests and customers. How do we provide what they are looking for? How do we provide physical and virtual conferencing? We have also come up with Drive-in Movie Cinema, among others. We are going to ensure we run asset-light strategies to bring in new initiatives that can continue to help us remain standing in the business.

On our future plans, we have suspended our expansion plans. For instance, we initially planned to set up hotels in Port-Harcourt, Rivers State, which has been suspended for now. Also, we suspended further commitment to buy fixed assets and operating equipment as well as reduced our energy consumption and maintenance costs.

Bottom Line: The hotel faces a tipping point and as things stand survival is what is its priority.

  • To do so the hotel will have to make tough decisions some of which as job cuts, reduction in overheads, and suspension of capex related activities.
  • This will be a very painful restructuring process for the hotel group but it appears this is the only way it can survive.

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Hospitality & Travel

Emirates Airlines banned from operating in Nigeria

UAE’s Emirate Airline has been banned from operating in Nigeria.

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Just in: FG bars Air France, KLM and other foreign airlines, FG to spend N13 billion for automation projects in 4 airports, domestic flights, international passengers, Coronavirus: FG enforces immediate screening of travellers at airports with new directive

Emirates Airline has been added to the list of airlines which have been banned from operating in  Nigeria. The ban will take effect from the 21st of September.

This was announced by the Minister of Aviation, Hadi Sirika in a social media statement on Friday.

READ: Nigeria’s Innovate 1 Pay expands into Dubai’s tech market 

“The PTF subcommittee met today with EU Ambassadors to discuss Lufthansa, Air France/KLM ban. The meeting progressed well. Emirates Airlines’s situation was reviewed & they are consequently included in the list of those not approved, with effect from Monday the 21st Sept 2020.” Sirika stated.

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This comes as the UAE government has been accused of not renewing visas of Nigerians in Dubai and also rumours of a VISA ban for Nigerians applying for visas.

READ: Analysis: CBN bans maize importers from accessing FX

Last month, the UAE embassy in Nigeria denied there is a VISA ban on Nigerians entering the Middle Eastern country. They said: “At the onset of the COVlD-19 pandemic, the UAE took a number of precautionary measures to combat the virus’ spread, including the temporary suspension on issuing UAE visas for all nationalities as of March 17, 2020.

After entering the recovery phase of the pandemic, the UAE eased some measures on July 7, permitting visitors from various countries to adhere to the necessary precautionary measures, including by showing negative PCR test results within 92 hours of travelling to the UAE. This includes those visiting from Nigeria.”

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Hospitality & Travel

Arik Air’s operation shut by Aviation Unions

Unions’ action is due the airline’s alleged failure to pay seven months’ salary arrears of workers.

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Why Arik Air carried out adjustment on scheduled operations, These are the sad reasons Nigerian airlines struggle and fail 

Arik Air operation has been shut down by Aviation unions over the airline’s alleged failure to pay seven months’ salary arrears of workers.

This was disclosed by a source in the airline, who claimed anonymity, because he is not permitted to speak on behalf of Arik Air.

READ: Local Airlines tell staff to forget April salary

According to him, aggrieved unions, the National Union of Air Transport Employees and the Air Transport Services Senior Staff Association of Nigeria, decided to withdraw their services, due to an alleged increment of Terminal levy by Bi- Courtney and other anti-labor practice.

Details later

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