AirAsia execs take unpaid leave to cut costs

PHILIPPINES AirAsia used to operate more than 500 weekly domestic and international flights — VICTOR V. SAULON

By Arjay L. Balinbin, Reporter

LOW-COST carrier Philippines AirAsia, Inc.’s management and senior-level employees have taken voluntary unpaid leaves of absence to reduce costs because of the coronavirus disease 2019 (COVID-19) crisis.

“Those taking voluntary unpaid leaves include managers, heads of departments, pilots, among others,” Philippines AirAsia’s Head of Communications David F. de Castro told BusinessWorld in a phone message on Tuesday.

AirAsia Group Berhad Chief Executive Officer Anthony Francis “Tony” Fernandes announced on Friday last week that “AllStars” or all employees of the group have “accepted temporary pay reductions of anywhere between 15-75%, depending on seniority.”

AirAsia operates in Malaysia, Indonesia, Thailand, the Philippines, India and Japan. Its services include hotels, holidays, activities and online shopping, as well as integrated logistics and digital financial services.

As for the Philippines AirAsia, which has around 2,000 employees, Mr. de Castro said: “Not all will be getting a salary reduction (via voluntary unpaid leave). Those in the junior positions will continue to get their salaries in full.”

“To minimize the impact on junior posts is the company’s objective,” he added.

Mr. Fernandes said he and the chairman of the group, Kamarudin Meranun, “will not be taking a salary during this period.”

“There’s no denying that our industry has been hit hard, and we are no exception. This is possibly the biggest challenge we have ever had to face. We have no revenue coming in; 96% of our fleet is grounded and we still have significant ongoing financial commitments such as fuel suppliers and leasing agents,” he said.

Mr. Fernandes said the group is doing all it can to cut costs during the crisis, as it strives to “come back fighting as fast as possible and continue to be the world’s best low-cost carrier.”

Philippines AirAsia used to operate more than 500 weekly domestic and international flights from its hubs in Manila, Clark, Cebu and Kalibo.

Philippine Airlines, Cebu Air, Inc. (Cebu Pacific), Philippines AirAsia, Air Philippines Corp. (PAL Express), and Cebgo, Inc. have temporarily shut down their passenger operations after Luzon was placed under an enhanced community quarantine.

Over 30,000 flights were canceled, affecting nearly five million passengers, according to the Air Carriers Association of the Philippines.

In January, AirAsia Group reported that its Philippine unit grew the most by 4 percentage points (ppts) to 23% in the fourth quarter of 2019 in terms of market dominance, driven by a strong 21% growth in passengers carried.

According to Philippines AirAsia Chief Executive Officer Ricardo P. Isla, the Philippine unit’s net income for 2019 grew “almost like P1.5 billion.”

To recall, the budget carrier swung to a net operating loss of P2.11 billion in 2018 from a profit of P710 million in 2017 as it was hit by the rise in the price of jet fuel and the weakening of the Philippine peso against the US dollar.