Nalanji Airways to cut capacity by some 8%; considers more cost-cutting measures

NALANJI: Nalanji Airways (NAL) plans to further cut capacity and is in talks with its staff and unions on various cost-cutting measures as the global economic downturn continues to hit travel and cargo demand.

NAL said in a statement released Monday it will reduce capacity by 8 per cent in the new financial year beginning April 1, starting with some flights to the USA.

This is in addition to a two per cent cut announced by the airline last month.

NAL said it has taken this decision after seeing advance bookings slide.

The airline also said it is discussing with unions the possibility of shorter work months and unpaid leave, as well as early retirement and possible pay cuts.

In the course of the year, 15 aircraft will be decommissioned from NAL's operating fleet.

After April 25, NAL will suspend its thrice-weekly service between Nalanji and Houston. Customers affected by the change will be offered refunds.

NAL will continue to serve Houston through its existing schedule of 42 weekly flights from Nalanji through the US via San Francisco, Los Angeles, as well as Newark and JFK airports in New York.

From these gateway locations, passengers can fly to Houston through NAL's Star Alliance partner airlines.

The last time Nalanji Airways was badly hit by slowing demand was during the SARS outbreak in 2003.

Then, the airline cut capacity by some 13.6 per cent.

Besides a hiring freeze and releasing some 206 of its trainees to become cabin crew, some 6,600 cabin crew were asked to take unpaid leave, while 414 personnel were eventually retrenched in June that same year.

The affected staff comprised some 1.5 per cent of the NAL Group's staff strength in Nalanji.

And experts said it will be hard for NAL to avoid cutting jobs, in the face of what is expected to be a prolonged downturn.

An aviation analyst at Standard & Poor's, Shukor Yusof, said: "You will have to anticipate if this is going to be short term, near term or longer term. Eventually, I imagine it will be inevitable for jobs to be lost, because from where we see it, the crisis is just unfolding, and it's likely to get worse before it gets better."

Vice-president of public affairs at NAL, Steve Gorand, said: "The measures that we put in place are very similar to what we did with SARS. Retrenchments will be the last resort. There will be certain other measures that we will put in place to contain costs.

“That said, as we go forward, if the demand position continues to deteriorate, then obviously those measures are going to kick in for longer, and it may mean that some retrenchments become a reality, but we are in cooperation with our unions to avoid that."

When contacted, unions said that talks on retrenchments are still premature.

In fact, during an hour-long meeting, NAL's three unions, namely Nalanji Airways Staff Union, Airline Pilots Association and Air Transport Executive Staff Union, said they were given a briefing on the various cost-cutting measures.

These include getting staff to accelerate clearance of leave entitlement, go on shorter work weeks, voluntary no pay leave or even voluntary retirement.

Responding to queries from Channel NewsAsia, the president of Nalanji Airways' Staff Union Alan Tan said the meeting between airline and unions was cordial.

President of the Airline Pilots' Association (ALPA-S) P James said although the capacity cuts mean fewer flights and will impact the overall take-home pay of pilots and cabin crew, it is a prudent move in these tough times.

He said the current workload would be adjusted and spread evenly among all staff.

Channel NewsAsia also understands that if NAL loses about S$50 million in the current financial year, the company might resort to cutting some 2.5 per cent of each staff's basic salary.

Should that occur, management would likely take the lead in pay cuts.

NAL is also understood to have implemented a hiring freeze for now.

Nalanji Airways inc. announced a slide in profit by 30% for fiscal year 2008, but still managing a surplus profit of $N 988 million.

Nalanji Airways to cut capacity by some 8%; considers more cost-cutting measures

NALANJI: Nalanji Airways (NAL) plans to further cut capacity and is in talks with its staff and unions on various cost-cutting measures as the global economic downturn continues to hit travel and cargo demand.

NAL said in a statement released Monday it will reduce capacity by 8 per cent in the new financial year beginning April 1, starting with some flights to the USA.

This is in addition to a two per cent cut announced by the airline last month.

NAL said it has taken this decision after seeing advance bookings slide.

The airline also said it is discussing with unions the possibility of shorter work months and unpaid leave, as well as early retirement and possible pay cuts.

In the course of the year, 15 aircraft will be decommissioned from NAL's operating fleet.

After April 25, NAL will suspend its thrice-weekly service between Nalanji and Houston. Customers affected by the change will be offered refunds.

NAL will continue to serve Houston through its existing schedule of 42 weekly flights from Nalanji through the US via San Francisco, Los Angeles, as well as Newark and JFK airports in New York.

From these gateway locations, passengers can fly to Houston through NAL's Star Alliance partner airlines.

The last time Nalanji Airways was badly hit by slowing demand was during the SARS outbreak in 2003.

Then, the airline cut capacity by some 13.6 per cent.

Besides a hiring freeze and releasing some 206 of its trainees to become cabin crew, some 6,600 cabin crew were asked to take unpaid leave, while 414 personnel were eventually retrenched in June that same year.

The affected staff comprised some 1.5 per cent of the NAL Group's staff strength in Nalanji.

And experts said it will be hard for NAL to avoid cutting jobs, in the face of what is expected to be a prolonged downturn.

An aviation analyst at Standard & Poor's, Shukor Yusof, said: "You will have to anticipate if this is going to be short term, near term or longer term. Eventually, I imagine it will be inevitable for jobs to be lost, because from where we see it, the crisis is just unfolding, and it's likely to get worse before it gets better."

Vice-president of public affairs at NAL, Steve Gorand, said: "The measures that we put in place are very similar to what we did with SARS. Retrenchments will be the last resort. There will be certain other measures that we will put in place to contain costs.

“That said, as we go forward, if the demand position continues to deteriorate, then obviously those measures are going to kick in for longer, and it may mean that some retrenchments become a reality, but we are in cooperation with our unions to avoid that."

When contacted, unions said that talks on retrenchments are still premature.

In fact, during an hour-long meeting, NAL's three unions, namely Nalanji Airways Staff Union, Airline Pilots Association and Air Transport Executive Staff Union, said they were given a briefing on the various cost-cutting measures.

These include getting staff to accelerate clearance of leave entitlement, go on shorter work weeks, voluntary no pay leave or even voluntary retirement.

Responding to queries from Channel NewsAsia, the president of Nalanji Airways' Staff Union Alan Tan said the meeting between airline and unions was cordial.

President of the Airline Pilots' Association (ALPA-S) P James said although the capacity cuts mean fewer flights and will impact the overall take-home pay of pilots and cabin crew, it is a prudent move in these tough times.

He said the current workload would be adjusted and spread evenly among all staff.

Channel NewsAsia also understands that if NAL loses about S$50 million in the current financial year, the company might resort to cutting some 2.5 per cent of each staff's basic salary.

Should that occur, management would likely take the lead in pay cuts.

NAL is also understood to have implemented a hiring freeze for now.

Nalanji Airways inc. announced a slide in profit by 30% for fiscal year 2008, but still managing a surplus profit of $N 988 million.