We had previously reported on how several companies – airlines, aviation manufacturers and players in their supply chain – are facing a cash crush, and thereby laying off several hundreds of employees. As per the latest reports, Canada’s flag bearer, Air Canada, has stated their decision to reduce 60 percent of its workforce in an attempt to save cash amid the ongoing pandemic. The carrier is set to ask employees to reduce their working hours, go on unpaid leave for up to two years, or resign with travel privileges.
The airline said in a statement:
‘We 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.’
The airline had announced in March 2020, that it would lay off half of its workforce in accordance with a cost reduction plan. Further in April 2020, after the Canadian Government announced a wage subsidy plan, it rehired about 16500 of those laid-off employees which included flight attendants, mechanics and other support personnel. Air Canada, however, has not committed to maintain this programme after June 6, 2020.
Post the aviation lockdown, more than 200 aircraft of Air Canada have been grounded, and the carrier has lost more than a billion Canadian dollars in the first quarter of 2020. Air Canada’s current operations are down to just 5%, however, their current workforce allows for as much as 1500 flights a day. This overhead in employee cost is the main reason behind Air Canada’s fast draining cash reserves.
The airline further stated in a report:
‘In the current economic climate, an operation on this scale is not viable for the future. We are doing this to preserve our cash flow, to bring the size of the company in line with expected traffic levels over the medium and long term, and to position ourselves for renewed growth when business resumes.’
With most airlines and airplane manufacturers generating close to zero revenue in these testing times, it is important for these companies to strategise rightly so as to ensure that they see this storm through. Recently, several companies like GE Aviation, Boeing, among others, have also announced that they shall be cutting significant number of jobs.
The current situation in aviation industry is certainly grave. Many employees have lost their jobs, and with the uncertainty that prevails, many more job cuts are sure to happen in the near future.