Aircraft market shuts down in Porto Alegre due to layoffs.

By Luís Eduardo Gomes, in Sul21 - Hundreds of highly specialized jobs in the aircraft engineering and maintenance sector have been eliminated in Porto Alegre since September of last year due to the restructuring process of TAP Maintenance & Engineering (TAP ME). At least 500 people have already been laid off, and another 600 are at risk of losing their jobs, as this process could result in the closure of the company's operations in the capital. One alternative would be for the hangars at Salgado Filho Airport, which were used for aircraft maintenance by the company, to be occupied by other companies, creating new jobs. However, there is also concern that Fraport, the airport's concessionaire, will convert them to cargo terminal services, which would generate fewer jobs.

TAP ME is the maintenance and engineering company owned by the airline TAP Air Portugal. It is the former VEM (Varig Engenharia e Manutenção), which was formally created in 2001, but whose aircraft mechanics activities began in 1927. VEM's operation at Salgado Filho airport came under the control of TAP ME at the end of 2005, when the Portuguese company bought it, through its Brazilian subsidiary Aero-LB, for US$24 million, in addition to assuming liabilities of US$100 billion.

Osvaldo Rodrigues, representative of the Airline Workers Union, points out that TAP ME has been experiencing management problems for many years, but that last year it began a restructuring process aimed at reducing its debts. Layoffs at the company began in January 2017, affecting workers in Rio de Janeiro, with at least 400 people being dismissed through a Voluntary Dismissal Plan (PDV) and an equivalent number of jobs being maintained. The first layoffs in Porto Alegre occurred between September and October of last year, but without a PDV being offered to workers in the capital.

At the time, an agreement was reached with the Airline Workers Union to pay the laid-off workers four salaries and maintain their health insurance for another five years. However, layoffs continued. To date, at least 500 people have reportedly been laid off, and there is a threat that TAP ME will close or sell its operations in Porto Alegre, leaving the remaining workers, who numbered around 1,1, without their jobs.

Paulo Sérgio, an employee of TAP ME, points out that a group of workers held a protest at Salgado Filho Airport on July 11th against the ongoing layoffs. They demanded a statement from the company regarding the remaining and already dismissed workers, as well as urging the municipal and state governments to protect jobs and allow the airport hangars to be used for aircraft maintenance and engineering. According to him, all 10 people who participated in the demonstration, organized by CSP-Conlutas, were suspended indefinitely without pay—they are taking legal action. “The company is exchanging a standard of excellence for nothing. Especially since they don't have qualified personnel like that to go there, because that was the best training ground,” says Paulo Sérgio.

Restructuring process

In conversation with South21 Last October, the president of TAP ME Brazil, Glaucia Loureiro, who took office that year, reported that the layoffs were part of a company restructuring process initiated at the end of 2016 and developed in conjunction with two consulting firms hired to assist TAP ME, with the goal of increasing the company's international competitiveness—the layoffs in Rio de Janeiro being part of the same process. At the time, 164 workers were being laid off, while another 830 remained working at the Porto Alegre headquarters.

Contacted this week regarding the continuation of the process and the possibility of the company closing or selling its operation in the capital, TAP Manutenção e Engenharia Brasil, through its press office, only responded that "it confirms that it is restructuring its operation to adapt to the current demand of the MRO (Maintenance, Repair and Overhaul) market. The company will continue to meet the demands of its clients, with services being performed by TAP M&E employees."

However, Paulo Sérgio says that the dismantling of aircraft maintenance and engineering operations is in full swing. According to him, between the end of June and the beginning of July, an aircraft undergoing maintenance in a hangar had its service completed, and all the workers who worked on it were laid off. Of the five hangars dedicated to aircraft maintenance, only one is operating with the restoration of actual aircraft, because there is a contract with the Brazilian Air Force (FAB) in effect. Apart from that, the company is only performing workshop work, that is, maintenance on parts such as landing gear and engines, but not on entire aircraft. This latter service required a much larger number of workers than the former, since it included revisions to be made directly on the aircraft, on engines, electronic equipment, interiors, seats, etc. "Since there are practically no more hangars and most of the mechanics have been laid off, this work is no longer being done," says Paulo Sérgio. “What’s happening is this: we were the largest maintenance center in Latin America, and with that, we’re practically losing it. Other companies that used to have maintenance done in Porto Alegre will no longer do so,” he adds.

Responsible for the company's internal logistics sector, he estimates that between 600 and 700 workers have already been laid off in this process, since, before being suspended, the cafeteria was serving only 380 meals during the day and 60 at night. South21 TAP ME was questioned about the number of layoffs already carried out, but received no response. As of the time of publication, the Airline Workers' Union had also not yet reported how many layoffs had been approved.

Vilmar Schumacher worked as a team leader at the company until June 21st, when he decided to accept the voluntary dismissal program (PDV) that was subsequently offered to workers in Porto Alegre and retire. He also estimates that more than 500 people have already been laid off and believes that the company will cease operations in the capital. “There’s only one hangar that’s operating with a plane that will soon be delivered to a Polish company. When that’s over, they’ll lay off people and only keep the workshop, which they have a contract with the Brazilian Air Force in effect. The moment all the contracts expire, I think they’ll close and leave,” says Vilmar.

TAP ME operated five hangars for aircraft maintenance and other workshops for parts overhaul in an area of ​​Salgado Filho Airport near where the Boulevard Laçador shopping mall now operates. Vilmar points out that the largest of the hangars, number 4, which can be seen from a distance by those traveling nearby, no longer bears the TAP ME emblem.

The retired airline employee emphasizes that if the closure of the operation in the capital is confirmed, or even if it remains with a much smaller number of employees, this would represent a major blow to the job market in the area, since the laid-off professionals are highly specialized in aircraft maintenance and engineering, having received extensive training from the company itself, and there would be no other similar opportunities even in the Southern region of the country. “Here in Porto Alegre, the only aircraft maintenance company in the Southern region operates. TAM's headquarters are in São Paulo. Gol is headquartered in Minas Gerais. Azul is also in Minas Gerais and in Campinas. Except for airport runway mechanic positions, there's nowhere to relocate these people, unless they leave for other locations. The situation is critical and worrying. The job market has become very small,” says Vilmar.

Varig's former glory

The layoffs and the threat of closure caught the attention of state deputy Pedro Ruas (PSOL), who began denouncing the situation. On July 4th, Ruas addressed the issue on the floor of the Legislative Assembly, stating that when TAP began its operations in the country, it carried out 14 monthly flights, but now it has 85 weekly flights, obtaining profits that reach €900 million annually. He also highlighted that TAP's purchase of Varig's maintenance center was financed by BNDES. “The minimum expected return in any financing contract with public money is the maintenance and creation of jobs. This is the return for the incentive. This is the return for public money handed over to private hands, in this case, foreign private hands,” he argued.

In conversation with South21 This week, he again expressed concern about the situation of the laid-off workers. “It’s a very serious problem. That was Varig’s glory, it had a globally recognized standard of excellence. Then TAP takes all that and now they are carrying out layoffs in strategic sectors, highly qualified personnel.”

According to Osvaldo, from the Airline Workers Union's leadership, the hope is that the hangars will be acquired by other companies and that maintenance and engineering services will continue to be carried out in the city. He emphasizes that there should be interest from other airlines, precisely because of the tradition and quality of service provided here, and that the union has received information that Azul would be taking over hangar number 4 and hiring professionals.

Fraport's role

Sources consulted for this article indicated that there is also information circulating that one of the reasons leading to the closure of TAP ME's operations is that the concessionaire Fraport, which took control of Salgado Filho airport in January of this year, is interested in using the space as a cargo terminal.

O South21 [The source] contacted Fraport through its press office, which denied the information and stated that the intention was to retain the area designated for aircraft maintenance, also emphasizing that there are contracts in effect with TAP ME that have not been renegotiated. Subsequently, upon request for more information, it sent a statement that simply said: “We inform you that information regarding the concessionaires of Porto Alegre Airport, as well as data on current commercial agreements and commercial strategy, is private.”

Note from Fraport – Brazil

Fraport Brasil – Porto Alegre sent a note this Thursday morning (26), expressing its views on the subject. The full text of the note follows:

Fraport Brasil – Porto Alegre clarifies that having an aircraft maintenance hangar at the airport is very important, as it increases the possibility of new routes for airlines, contributing to the development of the entire region. For this reason, it has never been in Fraport's interest for TAP to cease operations at Porto Alegre Airport, and we would very much like the company to maintain its activities. We emphasize Fraport's commitment to regional development through investments of approximately R$ 1.5 billion for the extension of the runway and passenger terminal, also generating more than 800 indirect jobs through the contracted construction consortium.