CSA Czech Airlines To Lay Off A Third Of Staff

September 24, 2014

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CSA Czech Airlines will lay off a third of its staff, including pilots, as part of a restructuring hastened by a drop in demand exacerbated by the stand-off between Ukraine and Russia, the company said.

CSA has been selling assets and shrinking its fleet in an attempt to reverse losses that have dogged the company since a failed expansion plan a decade ago, mirroring the plight of many European airlines being squeezed by intense competition from low-cost carriers such as easyJet and Ryanair.

It also adopted a strategy focusing on flights to the former Soviet Union, but has been hit by the demand fallout from the Ukraine crisis.

The latest layoffs follow a decision to hasten the grounding of six Airbus A320s out of a fleet of 23 aircraft, starting this winter. CSA said the plan had been drawn up earlier and approved by shareholders this month.

"The company decided to accelerate this step after a significant drop in reservations and passengers from the Russian Federation and other former Soviet Union countries in connection with the Ukrainian crisis," CSA said in a statement.

CSA will lay off 280 staff, including 70 pilots, from its 900-strong workforce. The cuts will also include flight attendants and office workers.

IMPROVEMENTS

The company said that its savings measures have brought improvements, helping it back into the black at the operating level this year.

"It is necessary to continue cutting costs to achieve an operating profit for the full year," the company said.

Airline operating margins worldwide stand below 2 percent, with traditional European airlines under particular pressure from budget carriers on regional routes while Middle Eastern carriers such as Emirates have eaten into business for long-haul flights to Asia.

The difficult environment was further illustrated by this week's strike by Air France pilots over the company's plans to launch a low-cost airline in Europe.

In central Europe, Hungarian national carrier Malev went under in 2012. In Poland, LOT has had to rely on government aid as it continues its long search for a new investor.

Korean Air acquired a 44 percent stake in CSA in 2013 from the state after the government had made several attempts to sell the airline. Privately owned low-cost Czech carrier Travel Service holds 34 percent and the government controls 19.7 percent.

(Reuters)