National Post (National Edition)
AIR CANADA HALTS WAGE SUBSIDY
FEW CHOICES LEFT FOR MANY WORKERS, UNION SAYS
Air Canada will not continue to use the federal emergency wage subsidy and has instead given employees the option of unpaid leaves, reduced work hours or resigning, the union representing the airline’s flight attendants said Thursday.
Canada’s largest airline said last week it plans to cut up to 20,000 people, or 60 per cent of its workforce, given plummeting demand for air travel during the global pandemic. Air Canada has slashed its flight capacity by as much as 95 per cent due to international travel bans and stay-at-home orders. As such, most of its employees have no work but have remained on the payroll thanks to the federal wage subsidy program that covers up to 75 per cent of salary costs.
“The extent of these layoffs has had a severe impact and is understandably upsetting for everyone at Air Canada,” Air Canada said in a statement Thursday.
“It is only regretfully that we take these measures, which are unavoidable given the profound effects of COVID-19 upon our business, which has currently been reduced by as much as 95 per cent with no prospect of a near- to mid-term recovery and a consequent reduction in our staffing requirements.”
The Air Canada component of the Canadian Union of Public Employees, which represents flight attendants at Air Canada and Air Canada Rouge, said it’s disappointed the wage subsidy is off the table and that the airline is cutting thousands of employees in a way that will prevent workers from accessing COVID-19 government aid.
The union said employees must choose between voluntary unpaid leaves lasting six to 24 months, reduced work hours with no top-up or resigning — voluntary measures that would prevent employees from accessing the Canada Emergency Response Benefit that provides laid off workers with up to $2,000 per month.
“The government and Air Canada are washing their hands of this devastating situation and the only options our members are left with is either quit or get laid off and go on (employment insurance),” Wesley Lesosky, president of the Air Canada component of CUPE, said in a statement.
“This is shameful and disrespectful towards the workers who have built this airline, who faced this epidemic on the front lines, and who were among the first in Canada to get sick with COVID-19 while doing their jobs.”
The cuts are expected to affect 7,000 of the 10,000 flight attendants CUPE represents, Lesosky said.
He called on the government and Air Canada to work together on better options for workers. Lesosky believes employees should be eligible for government benefits including the wage subsidy and the Canada
Emergency Response Benefit since government travel restrictions and the global pandemic are responsible for the lack of flying. If workers agree to reduced work hours, they should be eligible for EI top-ups, he added.
Air Canada said it is exploring mitigation measures with various unions and intends to recall employees when border, travel and quarantine restrictions loosen up.
“We sincerely hope that this occurs sooner than later. However, as a publicly traded company we have fiduciary duties to multiple stakeholders.”
Earlier this week, the federal government revealed more details on the Large Employer Emergency Financing Facility, a short-term loan program designed for companies with more than $300 million in annual revenue that need at least $60 million in bridge financing to weather the pandemic.
To get the cash, companies must agree to protect jobs and to give Ottawa a stake in their business through stock warrants. Corporations must also limit executive compensation to $1 million annually and prohibit dividends and share buybacks until they pay off their loans.
Air Canada’s chief executive Calin Rovinescu, who was paid more than $11 million in salary and shares in 2018, is forgoing 100 per cent of his salary during the pandemic along with chief financial officer Michael Rousseau. Other senior executives have agreed to a 25- to 50-per-cent pay cut.
While demand for travel has plummeted as Ottawa extended international travel bans until June 30, Air Canada has seen fewer cancellations and an improvement in bookings, Rousseau said at an investor conference earlier this week.
Despite the optimistic tone at the conference, S&P Global Ratings downgraded Air Canada and WestJet Airlines Ltd., Canada’s second-largest airline, as the operators burn through cash during the pause in travel.