07 September 2008

Are the job cuts enough?

According to the USA ATA - Airline Transport Association. They are about to shed 8% capacity and 36,000 jobs.

According to our estimates at T2 - the numbers are much higher with a capacity reduction of more than 10%. We have already determined that some airlines (such as United) have not announced enough personnel cuts to account for the reduction is capacity.

Ultimately we believe before the end of 2009 the capacity cuts could well be in excess of double this number. This would then lead to a reduction of almost double this number in staffing. A further round of off-shoring could occur particularly to Mexico. India has increased in costs to a point where off-shoring more functions are less likely there, indeed there is a trend away from this with Lufthansa for example ending one of its JVs in the sub-continent.

Food for thought



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