GoAir sends 90% workers on leave without pay

Go Airlines India, the Wadia group owned airline operator, has asked as many as 90% of its 5,500 employees to go on indefinite leave without pay.

The decision was taken last week as a government ban on flights amid a coronavirus lockdown dries up cash flow for the budget airline.

The airline will keep paying a small number of employees on payroll to restart operations when the government allows flights.

India’s civil aviation minister Hardeep Singh Puri said in a tweet late on Saturday that the government is yet to take a decision on domestic and international flights.

GoAir joins a slew of carriers across the world which have seen all revenue vanish swiftly, as travel bans all but stop air travel, forcing most to ground thousands of jets.

Commercial flights remain suspended since March 25 due to the nationwide lockdown to curb spreading of Coronavirus infection. The lockdown has been extended till May 3.

On March 17, the airline initiated a short term and temporary rotational leave without pay (LWP) program in which around 35% of its employees (from each department) were asked to go on LWP.

Workers involved in cargo operations (including both- ground staff and crew members) received their salaries for the number of days they worked last month.

South African Airways plans to lay off its entire workforce after failing to persuade the government to provide more financial aid, while Royal Jordanian Airline has enough cash to survive until the end of June and plans to ask the government of Tax breaks.

The airline industry may surrender $314 billion in ticket sales to the coronavirus this year, 25% more than previously expected, because of longer-than-expected lockdowns and the increasing toll on the global economy, as per the International Air Transport Association.

Most of the world’s airlines may go bankrupt by the end of May as they run out of cash, Sydney-based CAPA Centre for Aviation warned last month.

For India the focus will be on Spice Jet and Indigo the 2 large listed airlines and which are likely to see increased pressure on there cashflows as both of them are heavily leveraged and have a large employee base which means that a large part of there cost burden is fixed in nature which is negative,

Net net we believe that financial numbers for both Spice Jet and indigo are likely to be negative for Q4FY20 and any sustainable recovery looks only in FY22 onwards.

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