Malindo Air reportedly asks staff to take pay cut amidst COVID-19 outbreak

Malindo Air has reportedly requested staff members to take up to a 50% pay cut as well as two weeks of unpaid leave amidst the COVID-19 outbreak. Quoting a memo sent by CEO Mushafiz Mustafa, Reuters reported that Malindo Air has put in place several measures to manage the revenue shortfall. They include getting employees to volunteer for unpaid leave, suspending flights, as well as appealing to suppliers to defer payments.

In the memo, Mushafiz said the airlines is "now left with no choice" but to ask employees to take a pay cut of up to 50% "for the next several months until normalcy returns", Reuters said. Mushafiz added that this announcement was carried out "with not much of any further concrete options". Employees have been asked to cut their number of working days by up to 15 days a month, as part of the pay cut, Reuters added. 

Meanwhile in a press statement, the airline said it is appealing for help from its 5,200 employees to take two weeks of unpaid leave in a month from now until the situation improves. This comes as it has been "severely impacted" by dipping revenue due to COVID-19. 

Mushafiz said that demand for air travel "has almost collapsed" as experienced by every major regional carrier. "People are putting off travel, not just out of fear of contracting the virus but also due to the travel conditions and restrictions imposed by aviation and health authorities," he added.

The airline is experiencing a reduction of 50% flight capacity across its entire operation in comparison to 2019. As an additional measure, it has also started transferring some of its grounded aircraft to its sister company Batik Air Indonesia.

Besides Malindo Air, other airlines including Cathay Pacific and Singapore Airlines have either told employees to go on unpaid leave or implemented a recruitment freeze. Last month, Cathay Pacific told its 27,000 employees to go on unpaid leave to mitigate the financial damage caused by COVID-19. Meanwhile, Singapore Airlines implemented a recruitment freeze and according to The Straits Times, is also reportedly mulling a voluntary no-pay leave measure for employees.

Meanwhile, AirAsia X group CEO Nadda Buranasiri said a downtrend has been observed on passenger bookings in the forward months. AirAsia's acting CEO and president (airlines) of AirAsia Group Bo Lingam said it had a challenging start to 2020 with the COVID-19 outbreak, which disrupted some parts of its businesses due to travel restrictions, flight delays and cancellations. As a result, the airline has put in place proactive mitigating actions to limit the downside impact from COVID-19. These include aggressive marketing push to pursue market share, redeploying capacity to domestic and intra-ASEAN flights, as well as engaging and collaborating with industry stakeholders and authorities for incentives, discounts and rebates. Just last week, AirAsia launched its BIG Sale offering six million promotional seats to countries including Thailand, Indonesia, Cambodia, Japan, India and South Korea. It also offered guests the AirAsia Unlimited Pass that allows consumers to take unlimited flights for a year.

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