Go Back  FlyerTalk Forums > Miles&Points > Airlines and Mileage Programs > Air Canada | Aeroplan
Reload this Page >

AC to lay off half of workforce amid COVID crisis: internal memo

AC to lay off half of workforce amid COVID crisis: internal memo

Old May 15, 20, 4:25 pm
  #1  
Original Poster
 
Join Date: Mar 2019
Posts: 72
AC to lay off half of workforce amid COVID crisis: internal memo

AC to lay off half of workforce.

https://montreal.ctvnews.ca/mobile/a...memo-1.4941709


Not sure why they didn't do this before using all of the CEWS tax money?

Last edited by tcook052; May 15, 20 at 6:16 pm Reason: fix link
meltedmarshmellow is offline  
Old May 15, 20, 4:32 pm
  #2  
 
Join Date: Feb 2018
Location: YYT
Programs: AC P25K, WS Rewards, DL SkyMiles, UA MP, Priority Pass, AMEX MR, NEXUS, H-Honors, M-Bonvoy
Posts: 1,094
This is really bizarre...

Given that the wage subsidy is now in place until the end of August, I see no reason for AC to do this. Really unfair to the employees.
codfather is offline  
Old May 15, 20, 5:06 pm
  #3  
Original Poster
 
Join Date: Mar 2019
Posts: 72
Originally Posted by codfather View Post
This is really bizarre...

Given that the wage subsidy is now in place until the end of August, I see no reason for AC to do this. Really unfair to the employees.
They want a bailout despite having a solid balance sheet so this is Calin's way of begging for money by making his people suffer and getting Canadians on his side.

First he uses our tax money, then he uses us for his political gain. Ridiculous
meltedmarshmellow is offline  
Old May 15, 20, 5:08 pm
  #4  
 
Join Date: Jan 2008
Posts: 2,777
In a union memo, AC asks FAs to reduce hours, take leave or resign.

This is after about 5 weeks ago that AC announced it would rehire 16,500 laid off employees through goverment subsidy program which covers 75% of workers wages up-to $847/week.

Earlier today Ottawa extended wage subsidy program through end of August.

CBC article on AC: https://www.cbc.ca/news/business/air...ants-1.5572596

Global News article on AC: https://globalnews.ca/news/6950933/a...es-retirement/
YVRYEGYVR likes this.
mileageking is offline  
Old May 15, 20, 5:31 pm
  #5  
 
Join Date: Dec 2008
Location: Delta, BC
Posts: 1,454
Originally Posted by codfather View Post
This is really bizarre...

Given that the wage subsidy is now in place until the end of August, I see no reason for AC to do this. Really unfair to the employees.
Paying 25% of salary when flight capacity has been reduced by 95% is still not financially viable.
robsaw is offline  
Old May 15, 20, 5:45 pm
  #6  
 
Join Date: Jan 2008
Posts: 2,777
Originally Posted by robsaw View Post
Paying 25% of salary when flight capacity has been reduced by 95% is still not financially viable.
But shouldn't that lead to conversations with union to negotiate wage reductions vs laying off half of workforce (approx. 20,000)?

Keep in mind federal gov. budgeted $73 billion towards wage subsidy program from Mar 15 to Jun 7. So far government has spent less than $4 billion on this program. How much wage subsidy did AC leverage?
mileageking is offline  
Old May 15, 20, 5:55 pm
  #7  
FlyerTalk Evangelist
 
Join Date: Sep 2012
Location: SFO
Programs: AC S100K, Accor Gold, Bonvoy Gold, HH Diamond
Posts: 32,703
Originally Posted by robsaw View Post
Paying 25% of salary when flight capacity has been reduced by 95% is still not financially viable.
Is it 25%?

If I make $2000/week, the government will provide $847/week, and the employer still needs to pay the other $1153, right?

Or do I completely misunderstand how much this costs the employer?
Plumber and meltedmarshmellow like this.
canadiancow is online now  
Old May 15, 20, 6:06 pm
  #8  
 
Join Date: Jan 2018
Location: YVR/YEG/YYZ depending on day
Programs: E35K, FPC Platinum
Posts: 379
I assume in this action AC isn't responsible for medical coverage and other benefits for employees and their families, which is a huge load off.
Sign of the times, and AC I think being realistic about future of air travel for next 1-3yrs.

Any news of cuts at C level as well?
YVR72 and Transpacificflyer like this.
YVRYEGYVR is offline  
Old May 15, 20, 6:10 pm
  #9  
Original Poster
 
Join Date: Mar 2019
Posts: 72
Originally Posted by YVRYEGYVR View Post
I assume in this action AC isn't responsible for medical coverage and other benefits for employees and their families, which is a huge load off.
Sign of the times, and AC I think being realistic about future of air travel for next 1-3yrs.

Any news of cuts at C level as well?
Salaries were cut at the C suite level. At the director even i believe the same happened.
meltedmarshmellow is offline  
Old May 15, 20, 6:11 pm
  #10  
FlyerTalk Evangelist
 
Join Date: Sep 2014
Programs: AC SE100K-1MM, NH, DL, AA, Global Entry/Nexus, APEC..
Posts: 17,336
Originally Posted by YVRYEGYVR View Post
I assume in this action AC isn't responsible for medical coverage and other benefits for employees and their families, which is a huge load off.
Sign of the times, and AC I think being realistic about future of air travel for next 1-3yrs.

Any news of cuts at C level as well?
@YVRYEGYVR

As per the Financial Post - March 30 2020

https://business.financialpost.com/t...uring-covid-19


QUOTE:

"Rovinescu and chief financial officer Michael Rousseau will forgo 100 per cent of their salaries, while other senior executives will take a 25 to 50 per cent pay cut. Board members agreed to a 25 per cent pay cut. Other managers’ salaries will be reduced by 10 per cent."
24left is offline  
Old May 15, 20, 6:15 pm
  #11  
 
Join Date: Nov 2018
Location: Edmonton (Mostly)
Programs: AC SE100K
Posts: 347
Originally Posted by canadiancow View Post
Is it 25%?

If I make $2000/week, the government will provide $847/week, and the employer still needs to pay the other $1153, right?

Or do I completely misunderstand how much this costs the employer?
The government will pay up to $847 per week per employee. The remaining portion is the responsibility of the employer so in actual fact it is only 75% for employees that make up to $1130 per week. For employees that make more the percentage top up is less. The method of calculating the subsidy is on the CRA website and it is done through the business account a company has with CRA. The other option available is the recently announced LEEFF which will provide bridge funding to large companies.

Despite all of this it is pretty clear AC needs to get smaller. As mentioned above, when they are doing very little flying, maintaining the entire work force would be a tremendous challenge. There is some indication that they are going to try and use voluntary work reduction and early retirement to get to a smaller workforce but it is hard to see how, with potentially over 100 aircraft retired (when you account for the A320 retirements), AC would maintain their present workforce. It is a terrible time for aviation.
EdmFlyBoi is offline  
Old May 15, 20, 6:15 pm
  #12  
 
Join Date: May 2015
Location: YVR, ZRH
Programs: *G
Posts: 7,462
Originally Posted by canadiancow View Post
Is it 25%?

If I make $2000/week, the government will provide $847/week, and the employer still needs to pay the other $1153, right?

Or do I completely misunderstand how much this costs the employer?
AFAIK there's no government mandate that the company HAS TO provide the other money. Just "make their best effort to".

Paying 0% salary is as financially viable as laying everyone off, arguably.
Smiley90 is online now  
Old May 15, 20, 6:16 pm
  #13  
 
Join Date: Mar 2016
Programs: AC S100K
Posts: 352
[Deleted]

Last edited by TheCanuckian; May 15, 20 at 6:16 pm Reason: Redundant
TheCanuckian is offline  
Old May 15, 20, 6:27 pm
  #14  
FlyerTalk Evangelist
 
Join Date: Sep 2014
Programs: AC SE100K-1MM, NH, DL, AA, Global Entry/Nexus, APEC..
Posts: 17,336
Originally Posted by EdmFlyBoi View Post
........Despite all of this it is pretty clear AC needs to get smaller. As mentioned above, when they are doing very little flying, maintaining the entire work force would be a tremendous challenge. There is some indication that they are going to try and use voluntary work reduction and early retirement to get to a smaller workforce but it is hard to see how, with potentially over 100 aircraft retired (when you account for the A320 retirements), AC would maintain their present workforce. It is a terrible time for aviation.

QUOTE:

"In the memo, Landry said bookings are down to just five per cent of what they were last year and is losing as much as $22 million per day. He added that the company's hopes are to increase capacity to 25 per cent at some point later this year should travel restrictions be eased.

"It is almost surreal to think that only a few short months ago we were a team of nearly 38,000 who proudly carried an average of more than 141,000 people a day on 252 aircraft to 217 destinations around the world," he said. "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."
24left is offline  
Old May 15, 20, 6:31 pm
  #15  
 
Join Date: Nov 2018
Location: Edmonton (Mostly)
Programs: AC SE100K
Posts: 347
Originally Posted by Smiley90 View Post
AFAIK there's no government mandate that the company HAS TO provide the other money. Just "make their best effort to".

Paying 0% salary is as financially viable as laying everyone off, arguably.
There is if the employee has an employment contract that stipulates the wages to be paid. I don't believe a company can unilaterally reduce an employee's salary without renegotiation (although I am far from a labour lawyer). The other aspect of this is AC is unionised and the contracts are collectively bargained. I doubt the unions would go for a unilateral reduction in salaries without negotiation. Workforce reduction or layoffs are also collectively bargained so AC's ability to proceed with this plan would, I think, have to have some input from the unions.
eigenvector likes this.
EdmFlyBoi is offline  

Thread Tools
Search this Thread
Search Engine: