S7 Airlines will make cuts in its Moscow office

As Kommersant found out, the largest private airline in the Russian Federation, S7, decided to reduce the number of flight crews in Moscow, as well as employees of the Moscow office. The decision was caused by a decrease in the number of flights from Moscow due to the downtime of some Airbus A320 / A321neo aircraft due to problems with engines. In these conditions, S7 concentrates on its hub in Novosibirsk, where there is less competition with other major players. Some of Kommersant’s interlocutors believe that other airlines will also begin to cut staff this year as problems with Western aircraft increase. However, experts note that it was the S7 that suffered the most from sanctions due to the problematic PW engine on this Airbus series.

As Kommersant has learned, S7 airline is laying off crew members and employees at its Moscow office. We are talking about the sales department, as well as commercial, financial and economic departments. According to one of Kommersant’s interlocutors, the size of the reduction will be about 13% of the staff of the Moscow office (approximately 7% of the number of employees of the entire group). According to other estimates, the reduction will reach up to 15%.

One of Kommersant’s interlocutors says that S7 is undergoing a reorganization and merger of several legal entities, so work is underway to optimize the staffing table. At the same time, the company will focus on the development of technical and engineering divisions, where it plans, among other things, to increase the number of personnel.

The reductions in the Moscow office are associated with a decrease in flying hours. As Kommersant wrote on October 11, 2023, this year S7 reduced its winter schedule due to difficulties with the Airbus A320 / A321neo engines and temporarily parked about 20% of its aircraft. In total, the company has 100 passenger aircraft in its fleet. By winter, 13 of the 39 Airbus A320 / A321neo, which are equipped with American P&W engines, were not in operation. They are not repaired in the Russian Federation or friendly countries, and it is almost impossible to buy used engines on the secondary market due to problems with their use among all world carriers.

Launched in 2016, the PW1000G (GTF) engine still suffers from childhood illnesses, and in the summer of 2023, P&W recalled more than 1,000 of these engines due to problems. Then Financial Times wrote that air carriers in Europe and the USA were forced to cancel flights because of this. As a result, according to the IBA, at least 57 airlines have taken aircraft with such engines out of service.

The decision to downsize the Moscow office is due to S7’s intention to develop primarily in the regions and strengthen its hub in Novosibirsk. In September 2023, co-owner of the S7 group Tatyana Fileva toldthat revenue from flights from Novosibirsk in 2023 is close to that from traffic from Moscow. According to her, “the time has come a little different” and the airline needs to create a unique niche, “we need to go back to the region.” Ms. Fileva then clarified that the airline became the first in the country in the number of flights bypassing Moscow.

S7 told Kommersant that due to a change in the route network and a reduction in the flight program to a number of destinations from Moscow, the company decided to “redistribute flight crews and partially reduce the number of employees in the Moscow region.”

The company added that the entire optimization process is carried out in full compliance with current legislation. S7 offers some employees from Moscow to continue working in the Novosibirsk or Irkutsk branches. Pilots can retrain on another type of aircraft, in particular the Embraer 170, and continue working for the company. “In addition, some pilots and flight attendants, based on our recommendations, go to work for other airlines, including international ones,” the company concluded.

Aeroflot told Kommersant that the company is ready to consider all S7 flight attendants on a competitive basis. They added that the company has opened a recruitment of existing flight attendants from different airlines, about 80 people have already been hired, and Pobeda, a member of the group, is also ready to open a recruitment of existing flight attendants.

Several Kommersant interlocutors in the industry believe that the cuts at S7 will mark the beginning of layoffs at other major airlines.

They explain this assumption by the fact that traffic volumes are still 18% behind “pre-Covid” levels, when passenger traffic in the Russian Federation amounted to 128 million people.

However, editor-in-chief of FrequentFlyers.ru Ilya Shatilin argues that a trend towards mass layoffs should not be expected, and S7 turned out to be the airline most affected by the sanctions. “The reductions are obviously caused by the suspension of operation of the Airbus neo family, in total the carrier has 40% of these aircraft,” he says. According to him, the flight hours of crews in Moscow decreased by up to 50% (according to Kommersant – up to 25%), which caused a commensurate drop in income and, consequently, led pilots to look for new employers.

Previously, Moscow crews often flew on business trips to Novosibirsk, but this practice stopped after the carrier recruited local employees there to optimize costs. According to the expert, the unemployed crews will one way or another be employed in the Moscow branches of other airlines. But he doubts that it will be Aeroflot, since S7 was based in Domodedovo and the vast majority will have to change their place of residence to reduce travel time to work. In the summer of 2022, when flight crews were looking for work abroad amid a decline in flight hours, S7 sent about 20 of its pilots to the UAE on a fixed-term contract with AirArabia (see “Kommersant” dated June 28, 2022).

A number of Kommersant’s interlocutors in the industry noted that in the summer of 2024, during the high season, S7 plans to resume flights on currently parked aircraft. It is difficult to say today whether this step will be enough to load the remaining personnel and how realistic the intentions are to return these aircraft to the air, states Ilya Shatilin. At the same time, the expert assumes that the cuts will not affect the airline’s Novosibirsk hub and personnel in Irkutsk, which “is logical due to low competition, despite the development of Aeroflot’s hub in Krasnoyarsk.”

Aigul Abdullina