Sources said that a layoff plan and a reduction in the fleet are inevitable, arguing that the state could not afford the type of voluntary departure plan it provided in 2011.
Rabat – Morocco’s national airline, Royal Air Maroc (RAM), is waiting for the government to unveil its amendments to the country’s finance law before elaborating its own recovery plan, a ministerial source working on RAM’s recovery plan told Medias24.
The government is expected to present its amended finance legislation to the public in the coming days.
The official believes that the future of the RAM is dependent on the government’s financial assistance plan, which will “replace the famous program contract which is no longer valid due to the COVID-19 crisis and its effects on national aviation activity.”
To help the national airline overcome the crisis, the source stated that the government must provide financial assistance of up to MAD 2 billion ($200 million). The official added that whatever the amount allocated, the state will condition the financial assistance on halving both the airplane fleet and the overall size of the company.
Morocco’s flag carrier has a fleet of 59 airplanes and halving it will require the company to lay off at least half of its employees, according to the source.
“Indeed, if the RAM keeps 30 planes out of the 59, it will no longer need a workforce of 5,000 people (direct jobs and subsidiaries) and may have to reduce its staff by 2,500 or even 3,000 people,” the source explained.
“There are a series of preliminary meetings between the various protagonists — ministries of air transport and finance with the RAM — to determine the necessary budgetary envelope.”
Regarding forecasts on the loss of air traffic in 2020, the official pointed out that Morocco is expected to lose 20% of its air traffic, equivalent to 5 million passengers, spread over all airlines operating in the country.
Noting that RAM accounted for 65% of the total passengers traveling through Moroccan airports, the official said that the dramatic decline will cause serious financial losses and job losses within the company.
Expecting sufficient state support is unrealistic
In such a situation, the state would typically resort to a voluntary departure plan as it did in 2011 when 2,200 voluntarily left their jobs at a cost of MAD 1.6 billion ($160 million).
Today, however, the state is unable to finance such a plan “as it is solicited from all sides and is facing many economic layoffs,” according to the same source.
The official set the year 2023 as the ultimate date for a resumption of normal air traffic activities. They said the state is unable to support the company in a way that would allow it to keep all its personnel and its fleet for two or three years of gradual activity resumption, as it would cost it a minimum of MAD 10 billion ($1 billion) per year.
“It is an inconceivable and irrational calculation when you know that in 2019, the RAM achieved MAD 15 billion of turnover and could only generate a mediocre net result with its 5,000 employees and its 59 aircraft,” said the source.
The official was referencing the prediction that RAM will suffer a financial crisis until the full recovery of air traffic and global tourism.
The source concluded that a massive layoff plan and a reduction in the fleet are “inevitable.”