Brussels Airlines, which belongs to the Lufthansa Group (LHA.DE), announced it would reduce its workforce by a quarter by cutting 1,000 jobs as the coronavirus pandemic continues to ravage the aviation industry.
Brussels Airlines, which is Belgium’s biggest carrier, said that the “extremely negative impact of the coronavirus crisis on the company’s financials and ongoing very low demand for air travel” has forced it to make structural changes to reduce costs.
The overall size of the company in terms of its workforce will be 25% smaller, the airline said.
“This unprecedented crisis has worsened our financial situation obliging us to take substantial and indispensable measures. The restructuring is urgently needed in order to survive the current crisis and to become structurally competitive in the future,” Brussels CEO Dieter Vranckx said in his statement.
It will also reduce its fleet by 30%, and no longer fly on unprofitable routes. The airline does not expect demand for air travel to return to a “new normal” until 2023.
The airline is in talks with the Belgian government for a €290m (£254m, $314m) bailout to weather the crisis, and said it is also seeking financial assistance from its owner Lufthansa.
Parent company Lufthansa is also in a shaky position, and currently in discussions with the German government over the structure of its bailout, which could cost about €9bn.
Its talks with the government have been mired in arguments over what kind of stake or say Berlin should get in return for the rescue package— the government reportedly requested a 25% stake in the airline.
According to a Bloomberg report on Tuesday, officials expect to hammer out the conditions to finalise the bailout deal this week or early next week. Bloomberg sources said that European regulators are demanding that the government dispose of its stake in the airline after six years.
Airline stocks fell on Monday after the British government announced that visitors arriving in the UK will face a 14-day quarantine in a bid to stop the spread of COVID-19.