From April 3rd, Air Canada will furlough 16,500 employees. This comes as the airline slashes capacity by 85-90% and faces the unprecedented COVID-19 pandemic.
Air Canada to furlough 16,500 staff
From April 3rd, Air Canada announced that it will have to furlough employees due to the “unprecedented impact of COVID-19.” This will include 15,200 of its unionized workforce moving to “Off Duty Status” while another 1,300 managers will face a furlough.
These are temporary measures, according to the airline. Although, given the fluctuating nature of the situation, it is really anyone’s best guess when Air Canada will return to full operations. President and CEO Calin Rovinescu had the following comment on the situation:
“The unpredictable extent and duration of the Covid-19 pandemic requires a significant overall response. To furlough such a large proportion of our employees is an extremely painful decision but one we are required to take given our dramatically smaller operations for the next while.”
In addition to these furloughs, Air Canada is taking other steps. It ended the share repurchase program on March 2nd, engaged in a company-wide cost reduction and capital deferral program which is designed to save around $500 million CAD ($352m), drawing down operating lines of credit to the tune of $1 billion CAD ($705m), and cutting the salaries of executives.
The CEO and Deputy CEO will cut their salaries by 100% while the Board of Directors will cut theirs by 25%. Senior Executives will cut 25-50% of their salary. Meanwhile, Air Canada managers will cut their salaries by 10% for the entire second quarter.
Significant capacity reductions at Air Canada
Amid the ongoing crisis, Air Canada will cut its capacity in the second quarter of 2020 by 85-90% compared to operations at the same time last year. With so few flights operating, it makes sense for Air Canada to furlough some staff until capacity can be restored.
In the coming days, the flag carrier will likely work with the Canadian government to conduct more repatriation flights. The organization of such flights have a lot of elements to coordinate. Governments have to work together to bring citizens to and from airports, the airline has to schedule crews and implement cleaning and sanitation procedures, and health agencies have to monitor and work with the passengers coming home in order to reduce the spread of COVID-19.
For 16,500 Air Canada employees, this cannot be an easy time. The situation is incredibly fluid and it is unclear how long these furloughs will last and whether more will be necessary as the airline seeks to survive with significantly reduced operations.
What do you make of Air Canada’s furloughs? Let us know in the comments!