Air Canada cuts capacity by 90% and lays off 16,500 employees

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Calling the coronavirus crisis “devastating”, Air Canada announced Monday an unprecedented 85% to 90% reduction in capacity until the end of June and the layoff of 16,500 workers in April and May.

Of this number, 15,200 are union members: flight attendants, runway attendants, customer service agents, pilots and mechanics.

In addition, 1,300 of the approximately 5,550 non-unionized workers at Air Canada, whether administrative workers or managers, will be placed on “temporary availability”.

More than half of the 33,000 employees of the Montreal carrier will therefore be unemployed.

“Practically closed”

“Besides the Canadians we are bringing home and the pursuit of minimal business, we are pretty much closed for the bulk of the quarter,” said an internal note obtained by Le Journal.

Air Canada has already announced that effective April 1, its service will be reduced from 53 to 13 airports in the United States and from 62 to 40 airports in Canada. Elsewhere in the world, its network will grow from 101 to just six airports: London, Paris, Frankfurt, Delhi, Tokyo and Hong Kong.

The laid-off workers will retain their benefits and their employment relationship with Air Canada.

“Extremely painful”

“Laying off such a high proportion of our employees is an extremely painful decision, but one that we have to take into account given the dramatic reduction in our activities for some time,” said airline CEO Calin Rovinescu in a statement. in English.

Mr. Rovinescu and his chief financial officer forfeit their entire salary, while that of the other members of the management committee will be cut by 50% and that of the other senior executives, by 25%. All other executives and administrative workers will experience a 10% drop in pay in the second quarter.

In addition, to further increase its liquidity, Air Canada will cut capital investments by $ 500 million and draw down approximately $ 1 billion in lines of credit.

Carrier currently examines announcement by Trudeau government on Monday that all businesses suffering a drop of at least 30% in their earnings may receive assistance of up to 75% of the wages of workers who may be laid off .

Air Canada also implores Ottawa to provide special assistance to the airline industry.

Air Canada shares fell 4% yesterday to close at $ 16.08 on the Toronto Stock Exchange.


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