Air Canada to cut up to 90% of capacity in 2Q2020, implements more severe cost cutting

Air Canada announced (30-Mar-2020) it will cut capacity by 85% to 90% year-on-year in 2Q2020. In order to deal with the effects of coronavirus on the airline, Air Canada is also implementing the following measures:

• Temporarily placing 15,200 unionised members on off duty status, effective on or about 03-Apr-2020;
• Temporarily furloughing 1300 managers, effective on or about 03-Apr-2020;
• Introducing cost reductions and capital deferral programme of at least CAD500 million (USD352.8 million);
• Drawing down operating lines of credit worth approximately CAD1 billion (USD705.5 million), for additional liquidity;
• Cutting CEO/president and deputy chief executive/CFO salary by 100%;
• Cutting senior executive salary by 25% to 50%;
• Cutting board of director member salary by 25%;
• Cutting manager salary by 10%;
• Suspending share repurchase programme from 02-Mar-2020.

Additionally, the airline is assessing the impact of the new wage subsidy programme on its mitigation plans. According to Air Canada, Canada's Prime Minister Justin Trudeau also acknowledged that airlines will need more support than the wage subsidy and loan credit measures already announced. [more - original PR]