TAP Air Portugal is reportedly preparing to cut 3,600 jobs and downsize its fleet. 

The staff cuts would reduce salary payments by around €187.5 million per year, according to the newspaper Portugal Resident. It reports that out of a workforce of 10,600 at least 1,600 contracts will not be renewed. The company could also fire around 500 pilots, 750 cabin crew and 750 ground staff.

The staff cuts are reportedly part of the restructuring plan that TAP Air has to present to the European commission in December 2020. TAP Air hopes that the new plan will help to justify the €1.2 billion loan that was offered to the airline in June 2020. The Commission has given the airline six months to either pay back the loan or submit a restructuring plan.

In September 2020, the air carrier received around €500 million of its potential €1.2 billion state rescue loan from the government.

Unions expressed their concerns about the planned job cuts and criticized the airline for trying to avoid paying salaries to its workers. One of the unions, SNPVAC, called the new plan a “brutal cut in staff and salaries outlined” and announced they would not accept the new measures. 

Previously, TAP has adopted an instrument referred to as extraordinary support for progressive recovery, “Apoio Extraordinário à Retoma Progressiva da Atividade”, to reduce working hours for all employees between 70% and 5%. Also, 729 employees’ contracts were not renewed from January until September 30, 2020. These measures decreased personnel costs by 49% compared with 3Q19, according to the TAP Air 3Q 2020 trading update.

TAP ended 3Q20 with a fleet of 101 aircraft. The company announced it will continue “right-sizing” the fleet for the post COVID-19 demand. TAP plans to retire 8 aircraft (2 A320 and 6 A319), partially substituted by 2 new generation aircraft (1 A321Neo and 1 A320Neo), deliveries of which are expected by the end of 2020. 

To discuss the future cuts, the TAP management, led by the main stakeholder – Portuguese government – plans to meet with the employee unions on December 2, 2020. 

TAP reported a €700.6 million loss in the first nine months of 2020, compared with a €110.8 million loss in the same period of 2019. In summer 2020, the Portuguese government invested €55 million to increase its stake in TAP Air from 50% to 72.5% to prevent the airline from going bankrupt.

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The Portuguese government reached an agreement with the private shareholders of the TAP airline. The state will increase its share in the company to save it from bankruptcy.