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Saturday 04.04.2020 | Name days: Valda, Herta, Ārvalda, Ārvalds

Riga International Airport to halt investments and reduce employee numbers

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state of emergency, support, Covid-19, coronavirus, airport, Riga, wash hands, stay home, importantThe shut-down of air traffic in Latvia because of the state of emergency has forced Riga International Airport to adopt emergency budget austerity measures – reduce all investment projects by 85%, reduce the costs of economic operations by 60% and reduce personnel costs by 40%, as reported by the company.

«Unfortunately, the board is forced to make these decisions because the airport’s revenue is critically low – since the beginning of the crisis the decline has reached 98%. On top of that, experts predict the aviation industry’s recovery will be very slow and gradual. The usual travel opportunities will not return quickly because of caution, travel restrictions and consequences of the crisis,» as noted by Riga airport’s board.

Members of the board stress that the capital association’s results for 2019 and 2018 allow fully covering wages and operational costs.

Since the beginning of the crisis the company has optimized processes and has reduced costs. Unfortunately, the pessimistic outlooks for aviation industry’s recovery in Europe after the crisis may force even more austerity decisions. This is why major changes will also affect Riga International Airport’s personnel policy, as explained by the company’s representative Laura Karnīte.

Already more than 500 workers are idle and paid their normal wages.

«However, estimates show the company will have to reduce the number of employees by June. The exact size will be decided by the board once resources have been accounted for and workloads for employees meet the market’s situation. This also requires generating optimal reserves for gradual recovery after the crisis. To accomplish this, consultations have started with Republic of Latvia Airport Workers Trade Union,» Karnīte reports.

Read also: Latvia pushes law on support to prevent Covid-19 damages; state to pay idleness benefits

To make sure the reduction of employees affects as few people as possible and no wage reduction is necessary, the company’s board has already halted all of the airport’s benefits and prize money payments to employees.

Once the crisis is over and positive growth is observed, the board will discuss the option to compensate the unpaid bonuses for this period to employees.

«In the past several years Riga International Airport was one of the more rapidly growing air traffic hubs in Europe. This radical decision – significant reduction of the number of employees – was made only when all other options for cost reduction were exhausted. However, in the current unprecedented situation the board’s goal is preserving operations on a level that would allow restoring the airport’s operations after the crisis. We are convinced we will be able to invite employees to come back by then,» stresses the airport’s board.

Riga International Airport urges adding the airport’s operations to the industry’s list of sectors to receive state support so that the airport has sufficient resources to make it through this period, as well as late restore operations once the crisis is over.

The company board reminds Riga International Airport is a strategically important transport hub that has major importance and influence over the country’s economy, which is why it is highly important to provide the opportunity to restore operations after the crisis.

As previously reported, because of the state of emergency in Latvia, the government has shut down all international passenger services: only certain freight flights and repatriation flights are allowed.

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