Air Canada has released that it intends to adopt the Canada Emergency Wage Subsidy (CEWS) for the benefit of its 36,000 Canadian-based employee workforce. The Government of Canada announced the CEWS on April 1, 2020, in order to help employers keep and/or return Canadian-based employees to payrolls for the Program Term of March 15, 2020 to June 6, 2020 in response to challenges posed by COVID-19.
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.
As Air Canada (including subsidiaries Air Canada Rouge and Air Canada Vacations) has suffered a drop in consolidated revenues of more than 30% and expects to continue to do so for the program term, it will apply for the CEWS retroactively to March 15, 2020 and retain or return affected employees to its payroll for the Program Term.
In addition to the 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 CA$750 million for the year, increased from the previous target of CA$500 million. Furthermore, Air Canada will draw down operating lines of credit of approximately CA$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% of their salary. Senior Executives will forgo between 25% up to 50% of their salary, while members of Air Canada’s Board of Directors have agreed to a 25% reduction. All other Air Canada managers will have their salaries reduced 10% for the entire second quarter.
Air Canada suspended its share repurchase program in early March 2020. (US$1.00 = CA$1.40 at time of publication.)
