Air Canada to reduce 1,700 employees as COVID-19 restrictions, lockdowns bite

Air Canada said on Wednesday it will cut first-quarter capacity by an additional 25%, resulting in a workforce reduction of about 1,700 employees, as travel restrictions, lockdowns and new testing requirements to combat the spread of COVID-19 hit bookings.

Carriers have been wrestling with a slump in demand and passenger confusion, following the Jan. 7 introduction of new Canadian rules requiring travelers to test negative for the novel coronavirus before boarding a plane bound for the country.

Privately held WestJet Airlines said last week it would reduce capacity, with schedule cuts that would mean furloughs, layoffs, unpaid leaves or reduced hours for about 1,000 employees.

Following the announcement, Air Canada said capacity in the first quarter of 2021, would be about 20 per cent of what it operated during the first three months of 2019.

The country's largest carrier said the changes to its schedule "better reflect expected demand" and will "reduce cash burn."

The Canadian government is "disappointed by airlines' decisions to cancel more regional routes," a spokeswoman said by email.

"COVID-19 has led to an unprecedented situation in the aviation sector," said Allison St-Jean, a press aide for the country's new transport minister, Omar Alghabra.

"We are fully seized with the issue of how hard the air sector has been hit because of COVID-19, and we are committed to providing assistance to Canada's air sector."