KUALA LUMPUR: AirAsia Group Bhd is expected to implement a 10 per cent salary cut primarily for its department heads including air operator’s certificate holders (captains) and certain senior executives, starting this month.
The salary reduction would be implemented temporarily for the next six months along with the permanent removal of free munch allowance, a source told the New Straits times yesterday.
“The decision was concluded after getting the approval from the low-cost carrier’s leadership team to implement cost saving measures in coping with the Covid-19 outbreak,” said the source.
The low-cost carrier (LCC) had recently announced various cost containment measures including pay cut, free munch and external training suspensions, duty travel restriction and big social events cancellations for the year.
Acting chief executive officer and airlines president Bo Lingam said the measures would be taken temporarily to reduce cost, conserve cash and protect the LCC’s future business.
Bo said the measures would minimise the impact on the LCC’s employees, while ensuring business continuity with a priority on flight operations’ safety and security.
“Containing and managing costs has always been in our DNA as an LCC and this is the one quality that sets us apart from our peers.”
He said AirAsia had been impacted by the sharp slowdown in the past few months due to travel restrictions and flight cancellations not only for China routes but other destinations.
Bo assured that the cost containment measures would have zero or minimal impact on most AirAsia employees especially those in the lower-income bracket.
“AirAsia continues to monitor the developments and employ aggressive marketing and education strategies to instil the confidence of flying back in the travelling community,” he said.
Bo said AirAsia will redeploy its capacity to domestic and intra-Asean flights to spur local and regional tourism.
“We are also continuously engaging industry stakeholders and tourism authorities for incentives as well as marketing and promotional collaborations,” he said.
Another source said pilots over the age of 60 would be released, while new aircraft orders had been deferred until a firm decision is reached by next year.
Bloomberg reported that demand for new aircraft was drying up as airlines wary of the coronavirus shunned air travel, ending the longest boom in aviation history.
The source said all AirAsia’s employees had been given an option for up to three months unpaid leave, which was available for application.
“The unpaid leave will be reviewed on a rolling three-month basis,” he said, adding that no overtime would be paid and new recruitment and promotions would be frozen until further notice unless it is regulatory needed.
The source said there would be no major events planned for the year unless it can generate revenue to the group and all non-regulatory trainings were cancelled except in-house with zero cost and no duty travel unless it is a regulatory requirement.
At time of writing, AirAsia was unable to provide any further comments in confirming the information.
Meanwhile, CGS-CIMB Research expects AirAsia to incur a core net loss of RM1.1 billion following lower demand and yields in Malaysia, Thailand and the Philippines.
The firm in a report last month, noted that this would be due to significant exposures to China, Hong Kong and Macau.