Westjet cutting over 3,300 jobs
CEO calls move ‘painful decision’; Ottawa urged to rescue industry
Westjet Airlines will permanently lay off more than 3,000 employees across the country as a result of the COVID -19 pandemic’s devastating effect on air travel demand.
In a video message Wednesday, CEO Ed Sims announced major organizational changes at the Calgary-based airline, including the consolidation of call centre activity in Calgary and the restructuring of office and management staff.
In addition, airport operations at all domestic airports except Calgary, Edmonton, Vancouver and Toronto will be contracted out.
The restructuring will result in 3,333 permanent job losses, including 430 call centre positions (72 in Calgary, 73 in Vancouver, 35 in Halifax, and 250 in Moncton,
N.B.), as well as 2,300 airport operations staff, including customer service agents and baggage handlers.
Sims said he is hopeful that whatever company Westjet ends up contracting out its airport operations to will ultimately be able to rehire many of the laid-off airport employees.
In addition, 600 head office employees at Westjet and its low-cost subsidiary Swoop will lose their jobs.
“The reality in which we find ourselves requires difficult and often painful decisions to ensure our continued viability in the future. The result is that today is the toughest of all these difficult decisions,” Sims said.
“Reducing Westjetter roles has always been a last resort. If there were other viable options available to us, we would be taking them.”
Before the pandemic, Westjet had 14,000 employees and flew to more than 100 destinations in 24 countries.
It now has 10,000 employees remaining and half of these have been temporarily furloughed due to the suspension of nearly all of the company’s commercial transborder and international flights.
Westjet has been able to access the Canada Emergency Wage Subsidy program, which provides a 75 per cent wage top-up for eligible employers, to keep many of its furloughed employees on the payroll — even though there is no work for them to do.
Officials with unions representing Westjet pilots and cabin crew said none of their members were affected by Wednesday’s layoffs.
One longtime Westjet employee said the number of people losing their jobs is “demoralizing ” for the organization as it grapples with a sudden drop-off in air travel.
“There are just a lot of unknowns and a lot of uncertainty and everybody will have to hang on until things get better,” said the employee, who spoke on the condition of anonymity.
Westjet said schedule operations have been reduced by more than 90 per cent year over year. Of the company’s 181 aircraft, 130 are currently parked.
Industry analysts said the permanent job losses aren’t unexpected, given the dramatic erosion in air travel since the outbreak of COVID -19.
Robert Kokonis, president of independent consultancy Airtrav Inc., said cuts at Westjet and Air Canada highlight the turmoil facing the entire sector, from the severe effect of the pandemic on bookings to the number of travel restrictions in the country affecting domestic and international travel.
But the lack of federal financial help for the sector compared with other countries is “embarrassing,” Kokonis stressed.
“We as a major western country have been moving at a glacial pace … on any kind of meaningful financial support for the Canadian aviation and travel sector,” he said.
Last month, Ottawa introduced the Large Employer Emergency Financing Facility, designed to assist companies that have more than $300 million in annual revenue and require bridge financing, although the loans come with a number of conditions.
The provincial government has also been pushing the federal government to extend help to Westjet and continued to press its case Wednesday.
“As airlines fall under federal jurisdiction, we call on the federal government to provide support immediately so that Westjet and all airlines can rehire staff and take to the skies once travel restrictions are lifted,” Economic Development Minister Tanya Fir said in a statement.
There are also concerns surrounding the effects the cuts and contraction at the airline will mean for the city, the airport and ongoing economic development efforts.
“They are a very well-managed company and taking action just shows just how difficult things are in the airline and tourism industries due to COVID,” said Mary Moran, CEO of Calgary Economic Development.
“An airport and an airline are the backbone to economic development. Route access, both for cargo and people, is critical for company attraction.”
In an interview with Postmedia last month, Sims said he doesn’t expect domestic air travel to recover until the fourth quarter of 2020, and international demand will likely take even longer.
“We might not be our previous size for a long time, if ever,” he said. “We just might not get back there.”
For Westjet, which was acquired last year by Toronto-based Onex Corp. in a $5-billion friendly takeover deal, these are the most challenging circumstances it’s faced since the airline was founded in 1996, said Calgary-based aviation consultant Rick Erickson.
Leisure travel has been squashed, although the public’s appetite for flying will return when the “fear factor” of catching the virus declines, he said.
“They have a very strong senior management team. These people know what they are doing. I think it kills Ed Sims to be standing in front of a microphone taking his airline apart,” Erickson said.
“I’m sure every muscle he’s got wants to go in a different direction, but that’s the financial reality of what is facing the airlines right now.”
There are just a lot of unknowns and a lot of uncertainty and everybody will have to hang on until things get better.