A recent company memo has revealed that Air Canada plans to cut roughly 20,000 jobs from its workforce within the next three weeks. With a total employee count surpassing 38,000, this represents over half of the airline. The move is a response to the significant drop in passenger air travel in recent months as a result of COVID-19 travel restrictions.
A smaller airline for at least three years
“Sadly, today the hard truth is that by every indicator we have available to us, we believe that we will be materially smaller for at least three years,” -Craig Landry, Air Canada’s executive vice-president of operations via CBC News
The memo follows the well-publicized words of airline CEO Calin Rovinescu, who said during his first-quarter earnings call that Air Canada was in ‘the darkest period ever’ in commercial aviation history. Landry’s estimation of a three-year recovery period echoes Rovinescu’s outlook last month, saying that it will take a minimum of three years to pass before 2019 levels of revenue and service return. In the memo, Landry says that the airline has been burning C$22 million a day.
Within the memo, the airline said the decision was made after a “fundamental review of what [must be done] to successfully emerge from this crisis and begin rebuilding our airline.”
In a Friday-evening statement to the CBC, this is what the airline had to say in response to the leaked memo:
“We therefore took the extremely difficult decision today to significantly downsize our operation to align with forecasts, which regrettably means reducing our workforce by 50 to 60 per cent…We estimate about 20,000 people will be affected.”
Basic services on Canada’s flag carrier
The airline says that it is now flying at about 5% of its May 2019 capacity. However, it hopes to increase this to 25% later in the year. This increase is entirely dependent on the government lifting, or at least easing, travel restrictions. Currently, domestic travel is allowed but discouraged unless it is essential. As for international travel, Canada, like many other countries, has shut its borders to non-citizens and non-residents.
Air Canada has made some efforts to adapt its operations to this ‘new reality’ in the short-term. This includes the conversion of some of its passenger aircraft for cargo-only operations. Several Boeing 777s, Airbus A330s, and DHC Dash-8s have had their seats removed to order to maximize cargo capacity.
For passengers, the airline has rolled out a suite of health and safety procedures under the banner name “CleanCare+”. Many of these procedures would only serve to increase operational costs for the airline as masks need to be supplied for workers. At the same time, all passengers will now be given a sanitation kit complete with wipes, sanitizer, a face mask, and gloves. Additionally, adjacent seats in economy will be blocked off as a social distancing measure.
Approval required from the government
CBC News also reports that the airline would need to apply for a “group termination waiver”. This is what Canadian labor law has to say on large-scale layoffs:
“When a group termination of employment is planned, a federally regulated employer is required to provide written notice to the Minister of Labour at least 16 weeks before the terminations of employment are to take effect.”
A government source told CBC News on condition of anonymity that the government has yet to receive formal notice about the layoffs from Air Canada.
While the loss of roughly 20,000 jobs is incredibly sad and disappointing, it also doesn’t come as much of a surprise given the bleak state of aviation right now. Many employees will be eligible to receive COVID-19-specific financial assistance from the government. Hopefully, it won’t be too long before many of these workers can be re-hired.
Are you surprised by the news of these job cuts? Let us know in the comments.