Lion Air Furloughs Roughly 8,000 Employees As COVID-19 Hits Demand

Indonesian low-cost carrier Lion Air Group will furlough up to 8,000 of its employees as demand falls sharply. The decision comes as the airline group flies only a fraction of its usual capacity amid a massive COVID surge in Indonesia. Let’s find out more.

Lion Air is Southeast Asia’s biggest low-cost airline by fleet size and employees over 23,000. Photo: Getty Images

Big step

According to Reuters, Lion Air has announced that it will furlough between 25 to 35% of its 23,000-strong workforce. This means anywhere between 5,750 to 8,050 jobs hang in the balance of going on leave without pay. While the carrier has managed to avoid such a drastic measure in the last 18 months, the situation has not improved enough.

Lion Air justified its decision by adding that it is currently only operating 140-210 daily flights, far below its usual 1,400 departures. This is due to Indonesia’s crippling wave of infections, causing one of the highest rates in the world. With deaths surging to over 1,700 every day in the last week and cases at over 40,000, the country is struggling to control the situation.

Lion Air has all segments of demand collapse as restrictions tighten across Indonesia and internationally. Photo: Getty Images

Restrictions in the main cities of Bali and Jakarta, and the Java Island mean low demand for domestic travel. International travel has been negligible since the pandemic took hold but has continued falling as several countries add new barriers due to the infection rate.

In a statement, the airline said,

“[The decision to furlough was made to] maintain the business and company’s sustainability, streamline company operations, reduce costs and restructure the organization amid aviation operational conditions that have yet to return to normal from the impact of the COVID-19 pandemic.”

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Struggling

While the latest wave of COVID has hit Lion Air hard, the carrier has been struggling for a while now. As Indonesia’s biggest airline, it has been renegotiating lease payments with lessors to bring down monthly payments.

The Lion Air Group includes the eponymous mainline airline, Batik Air, Malindo Air, Wings Air, and Thai Lion Air. It is Southeast Asia’s biggest low-cost airline group, beating out AirAsia in terms of fleet size. However, the pandemic has forced it to make several changes to survive and emerge on the other side.

Lion Air is Indonesia’s biggest airline and has been looking for ways to cut costs since last year but had avoided furloughs. Photo: Andrew Sieber via Flickr

It’s unclear how long the furlough will last and which employees will be hurt the most. With cases likely to take a while before reaching Spring levels, Lion Air is likely to see subdued traffic for at least the next month, if not longer. More details about the furlough will likely become clearer in the coming days.

High cases

Indonesia isn’t the only country in Southeast Asia struggling with a COVID-19 outbreak currently. After success in controlling the virus last year, countries like Thailand, the Philippines, and many others have seen a surge in infections. This has derailed plans to potentially reopen to foreign tourists, including Bali’s plan in July, and will prolong the aviation industry’s recovery.

What do you think about Lion Air’s decision? Let us know in the comments.

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