At Least 2,600 Lose Jobs as Indonesia's Lion Air, Sriwijaya Air Downsize

JAKARTA, KOMPAS.com – Lion Air and Sriwijaya Air are cutting jobs to survive the downturn resulting from the coronavirus pandemic. Lion Air is letting go 2,600 of its employees, while Sriwijaya has yet to make public the number of employees to be laid off.

Earlier in June, Indonesia's national air carrier Garuda Indonesia also laid off 150 pilots.

Lion Air Group’s Strategic Corporate Communications staff Danang Mandala Prihantoro said that the restrictions for air transportation have had a negative impact on the company’s performance.

Hence, Lion Air Group decided on July 2 to downsize its workforce of 29,000 employees. The affected employees are based in Indonesia and overseas.

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Lion Air is one of Indonesia’s airliners that have been granted government permission to start flying under limited passenger capacity.

According to Danang, despite being able to restart business operations, the company has been able to achieve only 10 to 15 percent of its normal capacity.

“The difficult decision was made with the main goal of maintaining the sustainability of our business and making sure our company stays afloat. We have to cut our spending, structure our organization, and downsize the company’s operations in the midst of uncertain times for the airline industry due to the coronavirus pandemic,” said Danang.

Sriwijaya Air will also cut back the number of its staff members by not extending contracts, however, the exact number has not been revealed.

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A Sriwijaya Air Corporate Communications staff explained that it will not lay off any of its permanent employees, but that the reduction of its workforce was inevitable as the airline industry remains uncertain.

Flight Observer at the Arista Indonesia Aviation Center Arista Atmadjati said that the Covid-19 impact began unraveling since February, but Indonesia's airline industry continues to shoulder the burden of the impact.

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The low occupancy of flights has battered airliners’ income.

“Layoffs are inevitable. This is the same around the world,” Arista said on July 6.

Although the Indonesian government has provided leniency to airlines, limiting the occupancy rate to 70 percent is insufficient to drive more income for these air carriers.

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Most of it is because these airliners are still optimizing its efficiency by operating some of its fleet.

The salaries or salary contributions airlines make to their employees make up 10 to 15 percent of an airline’s total operational cost.

Thus, with the low occupancy rate and the deployment of the aircraft fleet, downsizing the workforce is an unwanted step to take for these air carriers. 

(Writer: Rully R. Ramli, Akhdi Martin Pratama | Editor: Sakina Rakhma Diah Setiawan, Erlangga Djumena, Yoga Sukmana) 

Source: https://money.kompas.com/read/2020/07/06/160700926/garuda-lion-air-dan-sriwijaya-air-mem-phk-pegawai-mengapa

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