March 6, 2020
Smartwings Group, whose members include air carriers Smartwings and Czech Airlines, is implementing an austerity program in response to the extraordinary situation caused by the current coronavirus outbreak. The Group is adopting the following measures to face an economic impact of coronavirus on Smartwings Group and minimize damage.
Austerity measures adopted by Smartwings Group:
- labor costs reduction
- an option to temporarily switch to a part-time contract or go on an unpaid leave
- suspension of hiring activities
- suspension of planned trainings
- administrative cost reduction
- suspension of planned projects and postponement of current projects for a later date
- less frequent flights to most European destinations and a revision of the flight schedule
Further measures will depend on the development of the epidemic in Europe in the coming weeks. The overall impact of the current developments on the Group’s revenues is impossible to estimate yet but the largest air carriers expect that the situation might start improving within two weeks.
The austerity program will be implemented so as to minimize the impact of the current situation in an early stage. The measures are analogous to those being adopted by all major air carriers in Europe, such as Lufthansa, British Airways, Emirates, and Ryanair. Czech Airlines, which has suffered the greatest impact, has been forced to cancel flights to some destinations, including Milan and Bologna in Italy and Seoul, South Korea. Further cancellations of services and a revision of the flight schedule may follow should the demand continue decreasing.
This is the second time in one year that Smartwings Group faces an unprecedented extraordinary circumstances outside its control. It has been unable to operate its new Boeing 737 MAX 8 jetliners due their global grounding in March last year. The company has 7 of them in its fleet and was supposed to receive another 15 by January 2020. As a result, Smartwings Group has so far incurred damage exceeding 2 billion CZK and has been negotiating with Boeing on compensations.