(TAN): Montreal-based airline Air Canada is laying off 16,500 employees as it cuts capacity by up to 90% in the wake of the coronavirus pandemic and drop in travel demand.
The move, which the carrier said was “temporary”, will place 15,200 union members on “Off Duty Status” and “furlough” around 1,300 managers, starting April 3.
Air Canada’s President and Chief Executive Officer, Calin Rovinescu, said the decision is “extremely painful” but necessary for the airline to survive the crisis.
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“The unpredictable extent and duration of the Covid-19 pandemic requires a significant overall response. To furlough such a large proportion of our employees is an extremely painful decision but one we are required to take given our dramatically smaller operations for the next while. It will help ensure that Air Canada can manage through this crisis that is affecting airlines everywhere,” he said.
“We believe that the temporary nature of these reductions, many achieved through voluntary programs, combined with other mitigation measures, will position us to restore regular operations as soon as the situation improves. I understand and regret the impact this will have upon our employees and their families. I thank all of our employees, as well as union leaders, for working with us constructively to quickly implement these measures,” Rovinescu added.
While Rovinescu and Air Canada’s Deputy Chief Executive and Chief Financial Officer, Michael Rousseau will forgo their full salary, senior executives of the airline will forgo from a quarter to half of their salary considering the crisis. The members of the board and all other managers will accept a 25% and 10% reduction in their salaries, respectively, throughout the second quarter.
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Air Canada aims to save at least CAD 500 million (USD 352.3 million approximately) through its company-wide cost reduction scheme. It will draw down operating lines of credit of around CAD 1 billion in order to provide extra liquidity. The airline also said it has already stopped buying back its shares earlier this month.
According to reports, Air Canada had earlier sacked over 5,000 flight attendants amid declining demand.
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