Airlines to tap wage subsidy program to rehire workers who have been laid off amid COVID-19

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Air Canada and Flair Airlines will tap a government wage subsidy program to rehire workers laid off after most global airline traffic was halted amid the COVID-19 pandemic.

Air Canada, the largest domestic airline, said it will apply for the federal emergency wage subsidy retroactively to March 15 to “retain or return” employees who lost their jobs because of government flight restrictions that reduced seat capacity by as much as 90 per cent. Edmonton-based Flair Airlines said it will use the subsidy to rehire 130 staff members and restore salaries of employees who took a pay cut.

Air Canada on March 30 said almost half its work force – 16,500 flight attendants, pilots, service agents and others – would be laid off. The job cuts followed thousands of layoffs at domestic rivals, including WestJet Airlines, Porter Airlines and Air Transat.

Montreal’s Air Transat said it hopes to use the subsidy to recall 4,000 laid-off employees, but is awaiting more details of the legislation.

The government subsidy announced on April 1 would reimburse employers for 75 per cent of staff wages for 12 weeks up to a maximum of $847 per employee per week. To qualify, an employer must show that its revenue fell by 15 per cent in March or by 30 per cent in April or May. The measure is intended to limit job losses. Employers are not obligated to pay workers the remaining 25 per cent.

“As Transat has suspended its entire operations, we will not be in a position to provide work to most of the employees who would benefit from the [subsidy], nor to top up the compensation granted in the program,” said Christophe Hennebelle, an Air Transat spokesman.

Air Canada on Wednesday did not say how many employees would be returned to the payroll, but that it “intends to adopt the [subsidy] for the benefit" of its 36,000 employees based in Canada until June 6. “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,” said Air Canada, which also announced an expanded cost-cuts and spending-deferrals target of $750-million and $1-billion in credit facilities.

Unifor, the union representing more than 3,000 Air Canada sales agents, said the airline’s move will allow the workers to stay home while receiving three-quarters of their wages. “Today’s announcement gives a sigh of relief to workers, and shows that their employer respects the role they have played to make Air Canada one of the best airlines globally,” said Euila Leonard, president of Unifor Local 2002.

The Canadian Union of Public Employees, which represents 10,000 flight attendants at Air Canada and its Air Canada Rouge subsidiary, said aid for workers must be a key part of any government support for the airline industry.

The airlines are lobbying the federal government for a bailout, saying Canada should follow the lead of France, Germany, the United States and other countries that have agreed to prop up their carriers. John McKenna, head of the industry lobby group the Air Transport Association of Canada, said he is “frustrated” by the silence from Ottawa on the matter. The group is seeking past and future breaks on fees, payroll support and loan guarantees.

Navdeep Bains, federal Minister of Industry, said on Wednesday the COVID-19 shutdowns have affected all industries, from oil producers to retailers and tourism companies. The wage subsidies are part of the government’s plan to ensure businesses retain employees ahead of a recovery, he said, declining to provide details on any airline bailout plan. “We will be putting forward sets of initiatives and ideas and plans to assist different industries, including the airline industry,” Mr. Bains said.​

Jim Scott, chief executive officer of Flair Airlines, said the discount carrier has applied for a loan from Export Development Canada but has yet to hear whether the application has been approved. Successful applicants must show their business was viable before the crisis and will be so after, he said. Flair has slashed its schedule to four Toronto-Calgary or Edmonton-Vancouver flights a week, from 200, and sold three of its six planes. The carrier is also moving cargo.

WestJet Airlines and its discount brand Swoop said the Calgary-based carriers are evaluating the subsidy program as details are released before the legislation becomes law. WestJet has announced 6,900 job losses.

With a report from Josh O’Kane

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