TORONTO (BLOOMBERG, REUTERS) - More major global airlines announced drastic measures to stay afloat during the coronavirus crisis, with Air Canada announcing it will cut capacity by as much as 90 per cent next quarter and temporarily reduce its workforce by about 16,500 to reduce costs.
Its decision, effective on or around April 3, puts 15,200 unionized employees on "off-duty status" while 1,300 managers will also be furloughed, the airline said on Monday (March 30). The company said the cuts were required because of the "dramatically smaller operations" resulting from travel restrictions worldwide.
"It will help ensure that Air Canada can manage through this crisis that is affecting airlines everywhere," chief executive officer Calin Rovinescu said. The reductions, along with other measures, "will position us to restore regular operations as soon as the situation improves."
Canada's biggest airline built a cash stash that puts it at an advantage in the current turmoil, analysts have said. The company has enough liquidity to meet financial obligations, TD Securities analyst Tim James wrote on March 27 after a call with management.
"The conservative approach to how the balance sheet was managed prior to the downturn is benefiting the company today, and management is working towards exiting this crisis as strong as the company entered it," James wrote.
Canada has pledged to craft an aid package for its airline industry, which like peers worldwide has severely curtailed flights in the fight to stop the Covid-19 spread. Prime Minister Justin Trudeau has yet to indicate what form it will take.
Air Canada said it will draw down its operating lines of credit of about C$1 billion (S$1 billion) and said Rovinescu and chief financial officer Michael Rousseau will forgo their salary, while senior executives and board members will take a pay cut.
Air New Zealand said on Tuesday it will lay off about 3,500 employees, nearly a third of its workforce, in the coming months, as the outbreak forced it to cancel nearly all flights.
The virus "has seen us go from having revenue of US$5.8 billion to what is shaping up to be less than US$500 million annually," chief executive officer Greg Foran told staff in an email. "We expect that even in a year's time we will be at least 30 per cent smaller than we are today."
New Zealand's national carrier, which employs 12,500 people, warned the layoffs estimate was a "conservative" assumption and the numbers could rise if the domestic lockdown and border restrictions were extended.
Low-cost US carrier Spirit Airlines is canceling all flights to and from the New York region after US officials warned against travel to the area because of the pandemic.
New Zealand's national carrier, which employs 12,500 people, warned the layoffs estimate was a "conservative" assumption and the numbers could rise if the domestic lockdown and border restrictions were extended.
US airlines have been pushing the Treasury to release up to US$58 billion in government grants and loans and had threatened to quickly start laying off tens of thousands of workers within days if they did not get a bailout.
