Air Canada is rehiring 16,500 workers

The 16,500 workers that were laid off by Air Canada last week due to the COVID-19 crisis are being hired back by the airline, the company announced Wednesday (April 8th)

The move comes after the Government of Canada announced its Canada Emergency Wage Subsidy (CEWS), which was developed to help employers keep and or return employees to payrolls in response to the economic challenges posed by the pandemic.

Details of the CEWS are still pending, but the program is intended to generally reimburse employers suffering revenue declines exceeding 30 per cent, which is the case for Air Canada.

READ MORE: Air Canada to reduce workforce by 16,500 as it grounds planes during COVID-19

Following an analysis of what’s known about the CEWS, discussions with Department of Finance officials on certain questions of interpretation, and subject to its adoption into law substantially as announced, Air Canada intends to adopt the CEWS for the benefit of its 36,000 Canadian-based employee workforce, the company stated in a release.

Air Canada's intention to adopt the CEWS has also received the support of all of its Canadian-based unions: ACPA, CALDA, CUPE, IAMAW and Unifor.

Reducing service 

As Air Canada (including Air Canada Rouge and Air Canada Vacations) has suffered a drop in consolidated revenues of more than 30 per cent and expects to continue to do so for the Program Term, it will apply for the CEWS retroactively to March 15th, 2020 and retain or return affected employees to its payroll for the Program Term.

READ MORE: Air Canada moves COVID-19 medical supplies on cargo-only flights

“The Canada Emergency Wage Subsidy is an extremely important program to help employees and employers during this time of crisis, and as one of Canada's largest employers most affected by COVID-19, we want to acknowledge the leadership of the Government of Canada in introducing it," Calin Rovinescu, president and CEO at Air Canada, stated in a release.

In addition to temporary workforce reductions, other measures implemented by Air Canada include:

• A company-wide cost reduction and capital deferral program, now estimated to be at least $750 million for the year, increased from the previous target of $500 million.
• Drawing down operating lines of credit of approximately $1 billion, to provide additional liquidity.
• Calin Rovinescu, Air Canada's President and Chief Executive Officer, and Michael Rousseau, Air Canada's Deputy Chief Executive and Chief Financial Officer, have agreed to forgo 100 per cent of their salary. Senior Executives will forgo between 25 per cent to 50 per cent of their salary while members of Air Canada's Board of Directors have agreed to a 25 per cent reduction. All other Air Canada managers will have their salaries reduced 10 per cent for the entire second quarter.
• Air Canada suspended its share repurchase program in early March 2020.

"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,” stated Mr. Rovinescu. “Depending on wage levels, many furloughed employees will get a somewhat higher amount under CEWS than they would otherwise receive from Employment Insurance payments plus they will maintain their health insurance and other benefits and stay more connected to our company during the Program Period. Once the crisis passes and passenger demand increases, we look forward to returning as many employees as possible to active status as we resume normal operations.”

As a result of the crisis, Air Canada has reduced its seat capacity by 85 to 90 per cent and is incurring significant revenue losses. 

Any near-term recovery is reliant on the lifting of domestic and international travel restrictions and return of passenger traffic, the company stated. 

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