Ukraine’s flagship air carrier, Ukraine International Airlines (UIA), has laid off nearly half of its staff — 1,000 employees out of 2,560 — to “optimize” its work during the pandemic.
Co-owned by controversial oligarch Ihor Kolomoisky, the airline had 1.7 million passengers in 2020, four times fewer than in 2019, which resulted in a sharp drop in revenue and has led to massive layoffs.
While UIA has already paid $22 million for canceled flights to over 85,000 customers, it still owes money to 55,000 of its clients, according to the airline’s annual report published on Dec. 23 and picked up by local media later on Dec. 27.
As a result of strict international travel restrictions imposed by many countries, including Ukraine, to curb the spread of the virus, the airline made only 17,000 flights this year, three times less than it made in 2019.
According to airline’s CEO, Evheniy Dykhne, UIA mainly fired administrative staff and flight attendants. Back in May, Dykhne said that the company would do its best to keep its key personnel, including pilots.
UIA’s fleet — which consists of 35 planes, including Boeing 777, Boeing 737 and Embraer-190 — had to stay grounded for the entirety of the strict lockdown in March–May. Their downtime cost the company $14.5 million a month, according to UIA spokesman Dmytro Doshyn.
By July, the company had generated losses of $60 million, Doshyn said.
At the same time, working under quarantine restrictions has taught the team “flexibility, adaptability and resilience,” according to Dykhne, who previously worked as general director of Kyiv Boryspil International Airport, the country’s main airport.
Moreover, Dykhne believes that mass vaccination against the coronavirus in European countries and the U.S. promises a recovery for the commercial aviation industry in 2021.
UIA is not the only Ukrainian airline that suffered from the quarantine this year. Low-cost airline SkyUp lost over $30 million in March –August, threatening the company with possible bankruptcy. Outside Ukraine, this fate befell British Flybe, Air Italy and Australia’s second-largest airline, Virgin Australia.
According to SkyUp co-owner Oleksandr Alba, the Ukrainian government did nothing to help domestic carriers survive the crisis, something that many European countries have done to support the industry.
Unlike Hungarian Wizz Air, which received $800 million from the state, or German Lufthansa, which got a $9.8 billion paycheck from the government, SkyUp and UIA have had no state assistance during the pandemic.
On Dec. 7, UIA even sent an official letter to President Volodymyr Zelensky with a request to develop a special financial assistance program for the airline so that it could pay salaries to its employees. Otherwise, the company said it would have to dismiss 140 pilots.
In the letter, the company also asked to restructure its debts to Kyiv Boryspil International Airport and to state air traffic servicing company Ukraerorukh.
According to Olena Volianska, head of the bankruptcy practice at law firm LCF, today local airlines desperately need financial support from the state or debt restructuring from creditors.
“National carriers are unlikely to be able to cope with the crisis on their own,” she said.
