MIAMI – Air Canada (AC) will scale-back its workforce as it has announced plans to cut around 20,000 jobs due to the ongoing COVID-19 pandemic.
The lay-off process will begin on June 7, representing a percentage decrease of nearly 53% of its workforce.
This is another step in the airline’s strategy to tackle the pandemic and its daily cash burn by grounding 225 aircraft and reducing its flight scheduling by 95%.
It is understood that at minimum, 19,000 jobs would be cut but could go as high as 22,800 in the worst case.
In an email presented by BNN Bloomberg in Canada, the airline expressed its regret with the difficult decision it had to make.
“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 percent. We estimate about 20,000 people will be affected.”
Shattered Hope of Job Security
An original announcement was made back on April 8 to lay-off over half of its workforce but the airline began proceedings of rehiring 16,500 staff in April because of the Canada Emergency Wage Subsidy, which would have covered the carrier.
The subsidies would provide employees to have 75% of their normal hourly wages covered up to $847 per week.
The airline at the time of this writing has not committed to the program beyond June 6, meaning that these lay-offs will go ahead.
The Canadian Union of Public Employees stated it was in discussion with the airline over potentially continuing the wage subsidy program through a bulletin sent to the Canadian Press.
“We know this news is not what any of us were expecting. The reality is that COVID-19 has severely impacted the demand for air travel over the past few months and into the foreseeable future. As such, there is no denying that we are dealing with the largest surplus of cabin personnel in our history.”
However, the airline is trying to minimize the number of lay-offs at the firm by asking flight attendants to reduce their hours as well as take a leave of absence for at least two years maximum, according to Canadian unions.
Whilst the job losses will be devastating to the Canadian economy, it comes as no surprise on the financial side.
The carrier posted a C$1.05b loss in the first quarter of 2020 compared to a profit of C$345m in the same period last year. Adjusted losses were recorded at C$392m compared to an adjusted profit of C$17m.
Revenues have dropped to C$3.72b compared to C$4.43b in the same period last year.
It is understood that by the third-quarter of the year, operations will be reduced to 75% as opposed to the current 95%, which is showing slower progress in recovery.
Streamlining Its Fleet
Air Canada will also be speeding up the process of retiring 79 older aircraft in order to simplify the airline’s fleet and to bring costs down.
Such aircraft could be the 13 Airbus A319 it has in its fleet, which has an average age of 22.9 years, as well as its 37 Airbus A320 that have an average age of 26.3 years old, according to data from Planespotters.net.
Other older aircraft of interest would be its five Boeing 767 aircraft, which at the oldest, average an age of 30.5 years.
Its 15 Airbus A321 have an average age of 17.1 years, whilst its 15 Airbus A330 have around 15.2 years of age.
Whilst there were around 85 units listed in those points, it does give Air Canada some options about where it can cut its operations, whether it is on the long-haul or on the short-haul perspective.
In all, the reduction of 79 aircraft would take the total fleet count in the airline just in the triple figures, at 102 aircraft, currently having 181 at the present time.
COVID-19 Continuing Its Aggression
Overall, it remains very clear that this level of aggression from this virus onto the aviation industry will continue, especially going into the long-term.
With many airlines not envisaging 2019 levels for the next three to four years, the workforce of the sector is going to be tested to the maximum.
Airlines, of course, do not want to lay off workers as it hinders growth, but in times like this, it is about survival at all costs.
As for Air Canada, it remains clear that its finances have been dented severely and that such measures are necessary in order to function in what is already a very volatile industry.