Arik Airline becomes first casualty of Covid-19, slashes salary, places staff on indefinite leave
Nigeria’s state-run Arik Airline has announced 80 percent cut in the salaries of all categories of staff and placed 90 percent of workers on leave without pay from April.
According to an internal memo cited by multiple sources, the decision of the Nigeria’s biggest carrier was informed by the downturn in operations due to restrictions placed on flight both global and domestic governments.
From next month, the company has ordered around 90 percent of its workforce to proceed on indefinite leave without pay, a fall out from the ravaging impact of the deadly coronavirus pandemic.
Affected staff were told to look out for further directives from the company’s Human Resources department as operational conditions improve.
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“To date, the situation created by the COVID-19 pandemic remains dire with a high level of uncertainty, even within medical circles regarding the containment of the pandemic. Although daily updates from a few countries seem to be encouraging, our situation in Nigeria appears to be getting worse. 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% 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,” the company wrote in a memo to staff.
“While we are not unaware of the challenges that each and every one of us may face during this difficult period, we join you in remaining hopeful that this ugly situation will abate in the shortest possible time and our organization will come out stronger in the long run.
“We are confident that the steps we are taking now are in the best interest of all and will see us through this difficult epoch in the history of mankind,” the company said.
Last week, the International Air Transport Association (IATA) estimated global airline losses from the impact of coronavirus pandemic to rise by 25 percent to $314 billion owing to the severity of the economic downturn and a slower than previously expected reopening of international routes.
Nigeria’s aviation industry is yet to come out with its estimate and the extent of the impact of the outbreak and subsequent shut down on its operations.
In February 2017, the Asset Management Corporation of Nigeria (AMCON) took over the management of Arik air following months of owing workers’ salary and the airline’s inability to pay back its debt to the country’s ‘bad bank.’
The airline, which was until it was taken over by AMCON was west Africa’s biggest carrier by passenger numbers and has struggled with debt amid a currency crisis in Nigeria, as customers are invoiced in naira but fuel suppliers are paid in dollars.
Records showed Arik owed N85 billion to the AMCON, set up by the state in 2010 to stem a financial crisis. AMCON had taken on more than N132 billion of debts from 12 Nigerian airlines, including Arik.
“Arik Airline has been in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance … that required immediate intervention,” AMCON said in a statement in 2017.