Monday, 16 March 2020

Azul stops new aircraft deliveries, cust capacity and asks staff to take unpaid leave as the coronavirus COVID-19 pandemic bites

 One of Brazil's leading airlines, Azul has confirmed that because of the economic impact of the coronavirus COVID-19 it will take drastic steps to cut costs, including cutting flights, grounding aircraft, asking staff to take unpaid leave and halting the delivery of new aircraft.

“While our top priority remains the health and safety of our crewmembers and customers, we continue to focus on adjusting capacity to demand and preserving our cash position during this challenging time. We ended 2019 as one of the most profitable airlines in the world. Our strong liquidity position, combined with the expertise and dedication of our team give me confidence that we will come out of this crisis a lot stronger as an airline”, said John Rodgerson, CEO of Azul.

The airline said it would be reducing capacity by 20%-25% in March and by 35% to 50% in April and beyond until the situation normalizes. As of March 16th, all international flights, except flights leaving from Campinas, will be suspended.

In addition to flight cancellations, Azul is taking several measures to reduce its fixed costs - including:

Executive management team salary cut of 25% until situation normalizes.Hiring freeze.Payment deferral of 2019 profit sharing.Voluntary unpaid leave program with over 600 requests approved so far.Suspension of travel and discretionary spending.Grounding aircraft.Suspending all new aircraft deliveries.

The airline says it has adequate reserves to survive the crisis,   at least in the short term,  as it ended 2019 with R$2.8 billion in liquid assets, including cash and cash equivalents. As of December 31, 2019, the company had no restricted cash and also held deposits and maintenance reserves totalling R$1.7 billion, and long-term investments totalling R$1.4 billion.

Recommended for you...

No comments: