Last Friday, Air Canada revealed plans to cut roughly 20,000 jobs from its workforce within the next three weeks. This has undoubtedly sent shockwaves through the airline and the Canadian aviation sector as the carrier is the largest in the country. When questioned about direct government assistance in the form of a bailout, Canada’s Prime Minister, Justin Trudeau would not provide a straightforward answer.
Answering with non-answers
With such a significant plan for layoffs looming, reporters are looking to the government and the nation’s leader for a response – or at least a comment. The source for this has been daily press briefings held on the front steps of Ottawa’s Rideau Cottage. It is here that Canadian Prime Minister Justin Trudeau has been residing for much of the pandemic, addressing the public and answering the media almost every morning at 11:15 local time.
Unfortunately, media inquiries regarding government assistance for the flag carrier went largely unanswered. One thing we’ve noticed from Canada’s top politician is a tendency to give vague statements when it comes to questions he would prefer not to answer.
With Air Canada’s situation, the Prime Minister says that he plans to keep working with industries to support them:
“We’re going to continue to work with sectors and industries to try and support them as they get through this pandemic,”
“I think we all know that this pandemic has hit extremely hard on travel industries and on the airlines particularly…That’s why we’re going to keep working with airlines, including Air Canada, to see how we can help even more than we have with the wage subsidy.” -Justin Trudeau, Prime Minister of Canada
Indirect government assistance for Air Canada
Of course, while Trudeau remains vague on the issue of an airline bailout, a handful of government programs do exist that Air Canada and its employees can draw upon. There are two main programs that would help Air Canada’s employees:
- The Canada Emergency Response Benefit (CERB) gives financial support to employed and self-employed Canadians who are directly affected by COVID-19. Eligible Canadians can receive C$2,000 for 4 weeks (the same as C$500 a week). However, if applicant/recipient situations continue past four weeks, they will need to apply again, up to a total of 16 weeks.
- And then, there is the Canada Emergency Wage Subsidy (CEWS). With this, Canadian employers affected by COVID-19, including Air Canada, would be eligible for a subsidy of 75% of employee wages for up to 24 weeks, retroactive from March 15, 2020, to August 29, 2020. This wage subsidy is intended to help companies re-hire workers previously laid off as a result of COVID-19, and help prevent further job losses.
For the CERB, individuals would have to apply themselves and would, of course, only be eligible after being formally laid off. As for the CEWS, Air Canada had adopted this plan at the beginning of April. This allowed the airline to keep much of its workforce on payroll that it had initially intended to layoff.
We would have to assume that despite the 75% subsidization of wages, the airline is still unable to cover the remaining 25% for much of its workforce.
Many other industrialized nations have instituted bailout programs and packages for their major airlines. For example, conditional, airline-specific funding was delivered to American carriers as part of its CARES Act. Meanwhile, the French government is supporting Air France with €7 billion in assistance, with another €2-4 billion expected to go to KLM through the Dutch government soon.
We’ll just have to wait and see if the government of Canada responds similarly. For now, employees out of a job will have to seek government assistance themselves through the CERB.
Do you think that Canada should provide an airline-specific bailout package? Or do you think the existing COVID-19 relief measures are enough? Let us know in the comments.