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Riga Airport Drastically Reduces Its Expenditures; It will Stop Investments and Review Personnel Costs

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23.03.2020

 

The exceptional situation in Latvia as a result of which air traffic has been almost completely suspended has forced the Board of Riga Airport to approve extraordinary budget-saving measures: all investment projects will be reduced by 85%, operating costs by 60% and staff costs by 40%.

 


“Unfortunately, the Board is forced to make such decisions because the Airport's revenue is at a critically low level, it is experiencing a decrease of 98% since the onset of the crisis. Moreover, according to expert forecasts, the recovery of the aviation industry will be very slow and gradual. The traditional travel options will not return as quickly due to simple precautions, restrictions on travel and the economic consequences of the crisis,” says the Board of Riga Airport.

The Board emphasizes that the positive financial results of the company last year and at the beginning of this year allow it to fully cover the salaries and operating expenses in short term. The company has been efficiently optimizing processes and cutting costs since the beginning of the crisis, but the pessimistic forecasts for aviation recovery in Europe after the crisis make the company pass even more difficult decisions. Therefore, the personnel policy of Riga Airport will also be significantly affected.

Already, more than 500 employees are on downtime, preserving their salaries during the period of the state of emergency announced in the country, namely, until 14 April. However, estimates suggest that the company will have to significantly reduce the number of employees by June, which will be decided by the Board, reviewing the required resources and workloads, as well as providing an optimum margin for gradual restoration of the operations of the company after the crisis. To this end, consultations have been initiated with the Airport Workers' Union of the Republic of Latvia.

To ensure that the staff reduction affects as few employees as possible and it is not necessary to reduce basic salaries, the company's Board, in agreement with the trade union has suspended all of the benefits provided for in the Airport's collective agreement during the period from 18 March until the end of this year. After the end of the crisis, with positive company growth, the Board retains the option to compensate employees for outstanding bonuses and allowances for this period.

“In recent years, Riga Airport has been one of the fastest growing air traffic hubs in Europe. Such a radical decision - a significant reduction in the workforce - is made only after all other options for cost reduction have been exhausted. However, in the current unprecedented situation, the main objective of the Board is to keep the company operating at a level that would allow the Airport to restore its operations after the crisis. We are confident that we will then be able to invite our employees to return to work,” emphasizes the Airport Board.

Riga Airport also reiterates its call to include sectors related to Airport operations in the list of specially supported sectors, as well as to decide on the granting of state aid in order to provide the Airport with sufficient resources to operate during this period and to resume operations fully after the crisis. The Board of the company reminds that Riga Airport is a strategically important transport hub, which plays a significant role and influences the national economy as a whole and it is important to ensure the company's ability to restore its operations after the end of the crisis.

As reported before, international passenger flights are forbidden due to the declared emergency situation in Latvia and thus Riga Airport operates on a minimal scale - only individual cargo flights and repatriation flights for the return of Latvian nationals.