AIR CANADA TO CUT 1,700 JOBS
More shock from tighter Covid-19 restrictions, stalled aid talks
MONTREAL/OTTAWA • Air Canada said on Wednesday it would cut first-quarter capacity by an additional 25 per cent as measures to combat COVID-19 hit bookings, while two well-placed sources said talks over a federal aid package had stalled.
Air Canada and rival Westjet Airlines — faced with huge slumps in demand — have been negotiating with the Liberal government since november. Progress is very slow amid disagreements over what Ottawa should offer, said the sources.
Air Canada said capacity in the first quarter would be about 20 per cent of what it was during the first three months of 2019. The latest move by Canada’s biggest carrier will mean a workforce reduction of about 1,700 employees.
Westjet said last week it would reduce capacity, with schedule cuts that would mean furloughs, layoffs, unpaid leaves or reduced hours.
The Liberal government says it is prepared to help the carriers but insists they reinstate regional routes they have suspended amid low demand, and refund passengers for tickets they can no longer use.
One source familiar with the talks said Air Canada wanted Ottawa to offer low-cost loans, citing what France, the netherlands and the United States have done.
“The airlines have not bent at all,” said the source, who requested anonymity given the sensitivity of the talks.
Ottawa would only agree to better terms if there were “an awful lot more extracted from the airlines,” the source added, without providing details.
Air Canada said the job and route cuts “better reflect expected demand” and will “reduce cash burn,” but it was not immediately available for comment about the government negotiations.
The 25 per cent reduction in service will also affect 200 employees at Air Canada’s Express carriers, the company said.
“We regret the impact these difficult decisions will have on our employees who have worked very hard during the pandemic looking after our customers, as well as on the affected communities,” Lucie Guillemette, Air Canada’s executive vice-president and chief commercial officer, said in a statement.
Guillemette said increased travel restrictions by federal and provincial governments have had an immediate effect on the company’s bookings.
“While this is not the news we were hoping to announce this early into the year, we are nonetheless encouraged that health Canada has already approved two vaccines and that the government of Canada expects the vast majority of eligible Canadians to be vaccinated by September,” Guillemette said. “We look forward to seeing our business start to return to normal and to bringing back some of our more than 20,000 employees currently on furlough and layoff.”
Jerry dias, head of the unifor union, said Air Canada’s move “leaves airline workers with continued disappointment in the federal government’s lack of action.”
A spokesperson for new Transport Minister Omar Alghabra said the government is “disappointed” with the cuts and is “developing a package of assistance to the Canadian airline industry,” which will have strings attached.
“Before we spend one penny of taxpayer money on airlines, we will ensure that Canadians get their refunds, regional communities retain air connections to the rest of Canada and Canadian air carriers maintain their status as key customers of Canada’s aerospace industry,” Allison St. Jean, a spokesperson for Alghabra, said in an email.
Air Canada notified airports in Atlantic Canada this week that it would cut additional routes in the region, suspending all flights in Gander, N.L., Goose Bay, N.L., and Fredericton until further notice. It also said it was suspending passenger service to yellowknife on Jan. 23.
The airline said it is contacting affected customers to offer them options such as refunds or alternative travel arrangements.
Air Canada’s cuts will also strongly affect British Columbia, where flights out of Prince rupert and Kamloops have been suspended.
Ed ratuski, managing director of the Kamloops Airport, told The Canadian Press he expects the cutbacks to remain in effect through March.
“Our concern is … what kind of impact this reduction in service will have on workers who have to travel by air to support their families locally,” he said.