BUSINESS
04/08/2020 11:52 EDT | Updated 04/09/2020 15:34 EDT

Air Canada Rehiring Laid-Off Staff After Liberals Sweeten Wage Subsidy

"We are trying to keep as many of our employees as possible during the crisis..."

MONTREAL ― Air Canada says it will apply for Ottawa’s emergency wage subsidy program and retain or rehire employees who have been laid off due to the fallout from the COVID-19 pandemic.

The airline announced last month it would cut about 16,500 jobs as part of a cost reduction program as a result of the virus and imposition of global travel restrictions.

Depending on wage levels, many employees will receive more under the Canada Emergency Wage Subsidy than they would from employment insurance, on top of maintaining their health insurance and other benefits, according to Air Canada.

Xinhua News Agency via Getty Images
Air Canada airplanes are seen at Pearson International Airport in Toronto, March 21, 2020. Air Canada says it plans to rehire furloughed workers, thanks to the federal wage subsidy.

“While our seat capacity and operations have decreased by more than 90 per cent overnight, we are trying to keep as many of our employees as possible during the crisis and this measure will certainly help,” CEO Calin Rovinescu said in a release Wednesday.

Air Canada said March revenues fell by more than 30 per cent year over year ― the threshold to qualify for the wage subsidy ― and expects cash inflow to remain below that mark throughout the program term.

The Montreal-based airline said retained or rehired employees will benefit from the subsidy for the length of the program ― currently slated to last for up to 12 weeks, retroactive to March 15.

The layoffs of 15,200 unionized workers and 1,300 managers went into effect last Friday and were initially slated to last through May amid shuttered borders and plunging travel demand.

International air travel has dropped to record lows, with passenger volumes at Canadian airports decreasing by 96 per cent year over year for the week starting March 30, despite thousands of travellers returning home on repatriation flights, according to the Canada Border Services Agency.

Passengers arriving from the U.S. and the rest of the globe dwindled to 11,400 and 3,300, respectively, compared to 376,900 and 73,200 in 2019.

In addition to the temporary workforce reductions, Air Canada announced March 31 that Rovinescu and chief financial officer Michael Rousseau have agreed to forgo their salary for three months. Rovinescu received $11.5 million in total compensation in 2018 and $9 million in 2017.

Senior executives will also forgo between 25 and 50 per cent of their salaries while members of Air Canada’s board have agreed to a 25 per cent reduction. All other Air Canada managers will have their salaries reduced 10 per cent for the second quarter.

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