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Monday updates: Air Canada cuts 20,000 staff

written by Dylan Nicholson | May 18, 2020

A file image of an Air Canada Boeing 787-8. (Air Canada)
An Air Canada Boeing 787-8. (Air Canada)

Air Canada is set to axe 20,000 out of 38,000 roles within the next three weeks, according to a leaked memo to employees from one of the airline’s most senior executives.

“Sadly, today the hard truth is that by every indicator we have available to us, we believe that we will be materially smaller for at least three years,” said Craig Landry, Air Canada’s executive vice-president of operations.

The email follows the words of chief executive Calin Rovinescu, who said during his first-quarter earnings call that Air Canada was in “the darkest period ever” in commercial aviation history.

Landry’s estimation of a three-year recovery period echoes Rovinescu’s outlook last month, saying that it will take a minimum of three years to pass before 2019 levels of revenue and service return. In the memo, Landry said that the airline has been burning C$22 million a day.

The airline said the decision was made after a “fundamental review of what [must be done] to successfully emerge from this crisis and begin rebuilding our airline”.

After the memo was released in the media, the airline commented during an interview with CBC, “We, therefore, took the extremely difficult decision today to significantly downsize our operation to align with forecasts, which regrettably means reducing our workforce by 50 to 60 per cent. We estimate about 20,000 people will be affected.”

When questioned about direct government assistance in the form of a bailout, Canadian Prime Minister Justin Trudeau would not provide a straightforward answer.

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He only stated, “We’re going to continue to work with sectors and industries to try and support them as they get through this pandemic.”

In other airline news:

  • Israeli flag carrier, El Al, has recorded a $60 million net loss for 2019. This is higher than the airline’s net loss from 2018. However, last year, El Al did fly more passengers while increasing revenue slightly.
  • It has been announced that business rescue practitioners have spent over $500 million on troubled South African Airways since they were called in to try and save it in December. The majority of the expenditure was for salaries, while the rest went on fuel, lease payments, and operational costs.
  • On 14 May, Japan Airlines announced its international flight frequency plans for the next month. According to the press release, the airline will reduce approximately 96 per cent of its international services until the end of June. While the number of passenger flights will be minimal, Japan Airlines will continue to operate cargo flights on select sectors to help the business keep moving.
  • Singapore Airlines has decided to permanently shut down its SilverKris business class lounge at Adelaide Airport. The lounge had already been temporarily closed since 24 March 2020, amid coronavirus concerns.
  • Cathay Pacific has reported its passenger numbers for April 2020. The Hong Kong-based carrier recorded decreasing capacity by 97 per cent in response to the global coronavirus pandemic. However, even with this capacity reduction, the passenger load factor was a paltry 21.7 per cent, with a year-on-year decrease of 99.6 per cent when compared to April 2019 numbers.
  • LATAM Airlines announced on Friday that layoffs were coming. The carrier, which is the largest in South America, expects to lay off 1,400 employees as the coronavirus pandemic continues to take its toll in Latin America.
  • British Airways and Qatar Airways are hoping for more custom on select Australian routes after the Australian Competition & Consumer Commission (ACCC) approved their joint venture to operate to four Australian cities earlier this week.
  • It was announced on Thursday that struggling Thai Airways International (THAI) could file for bankruptcy as an option to enable its rehabilitation.

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