- Arik Slashes April Salary by 80%, 90% of Staff to go
The projected negative impacts of COVID-19 have started crystalising in Nigeria’s aviation sector as one of the nation’s airlines, Arik Air, announced it will cut April’s salary by 80 percent and ask 90 percent of its staff to proceed on compulsory leave without pay.
In the statement released by the airline, Roy Ilegbodu, the Managing Director, explained that the decision was due to a 98 percent decline in the company’s revenue generation, over 35 percent declined in naira value and plunged in oil prices.
The statement read, “To date, the situation created by the COVID-19 pandemic remains dire with a high level of uncertainty, even within medical circles regarding the containment of the pandemic. Although daily updates from a few countries seem to be encouraging, our situation in Nigeria appears to be getting worse. With the current observed trend of events, it is prudent to lean on the assumption that the situation is likely to persist for a while longer.
“Of huge significance to us is that we have suffered a sharp decline of over 98% in our revenue streams since the suspension of our scheduled flights almost four weeks ago. Added to this is the rapid decline in the value of the Naira by over 35% against the benchmark and with oil prices now falling well below $15 per barrel, it is evident that we must, without further delay, take decisive action to preserve our organization.”
“After careful deliberation and analyses, management has decided to implement an 80 percent pay cut for all members of staff across the entire organization for the month of April 2020. Furthermore, commencing from May 1st 2020, no less than 90 percent of our staff will proceed on leave without pay until further notice. This position will be reviewed on a monthly basis and communications on further developments will be shared by our HR department as the situation evolves.”
The nation’s unemployment rate is expected to rise from the current 23.1 percent to over 30 percent this year as other sectors affected by COVID-19 are likely to start laying off staff except the federal government intervenes.
African finance ministers have said African nations need around $100 billion to protect at least 30 million jobs and curb the impact of the virus on the continent. However, despite the N3.5 trillion stimulus packaged announced by the central bank, the apex bank has not started injecting funds into the aviation sector.
“While we are not unaware of the challenges that each and every one of us may face during this difficult period, we join you in remaining hopeful that this ugly situation will abate in the shortest possible time and our organization will come out stronger in the long run. We are confident that the steps we are taking now are in the best interest of all and will see us through this difficult epoch in the history of mankind,” the message added.
Arik Air was acquired with over N300 billion debt, both local and international, by the Asset Management Corporation of Nigeria (AMCON) in 2017.
