Canadian Manufacturing

Trudeau mum on possible help for Air Canada following announcement of layoffs

The layoffs, which will take place June 7, will affect a minimum of 19,000 staff and could go as high as 22,800

May 19, 2020  The Canadian Press

PHOTO: C-FTJV Air Canada Boeing 737 MAX 8/Liam Allport

OTTAWA – Less than 24 hours after Canada’s largest airline announced plans for a massive downsizing of its workforce due to COVID-19, Prime Minister Justin Trudeau said he’s willing to see what can be done to help the ailing company – but remained mum on details.

Speaking to reporters outside his Rideau Cottage home on May 16, Trudeau acknowledged the difficult situation facing airlines and the travel industry during the COVID-19 crisis.

But even as he offered reassurances that Ottawa would continue to work with companies and industries hardest hit by the crisis, exactly what help Air Canada can expect to receive from government remains unclear.

“We will have conversations with Air Canada as we will with airlines across the sector to try and see how the best way to get through this particular pandemic is,” Trudeau said in a prepared statement.

“We know that airlines are incredibly hard hit by this pandemic and we will be there to work with them to see how best we can help.”

Trudeau sidestepped questions about whether aid could come in the form of a bailout, a federal stake in the company’s equity or whether Ottawa would be willing to help with the company’s pension and health benefit obligations. He committed only to talking to the company to try to determine what aid could be possible.

Air Canada will lay off more than half of its 38,000 employees next month as it grapples with the fallout from the COVID-19 pandemic. The airline estimates about 20,000 of its employees will be affected.

The layoffs, which will take place June 7, will affect a minimum of 19,000 staff and could go as high as 22,800.

The country’s largest airline – along with its competitors – has seen demand for air travel evaporate amid ongoing border shutdowns and confinement measures, prompting Air Canada to ground some 225 airplanes and slash flight capacity by 95%.

Air Canada’s move was announced after Trudeau extended the $73-billion Canada Emergency Wage Subsidy through the end of August earlier on May 15.

The airline did take advantage of the federal wage subsidy program to rehire over 16,000 employees initially laid off in March due to the pandemic. But now the company says workers who are laid off will no longer fall under this program and will have to apply instead for the Canada Emergency Response Benefit, which pays $2,000 a month to workers who have lost their jobs due to COVID-19.

Trudeau noted airlines and other big employers struggling through the pandemic can also access a bridge financing program being made available to companies with at least $300 million in revenues so they can stay open, keep employees on their payrolls and avoid bankruptcies.

He made a point to note this is “not a bailout” but rather a fund that offers loans to companies to help them get through the crisis.

“We are still working with companies to see who is taking that up and how the format of it will be worked out,” he said.

The federal government will continue to work with Air Canada to try to determine the best way to get through the crisis, Trudeau said.

“I think we all know this pandemic has hit extremely hard on travel industries and on the airlines particularly, that’s why we’re going to continue working with airlines, including Air Canada, to see how we can help even more than we have with the wage subsidy.”

Meanwhile, Trudeau said Health Canada has authorized the first clinical trial for a potential COVID-19 vaccine at Dalhousie University in Nova Scotia.

The National Research Council of Canada will work with the manufacturers so that if these vaccine trials are successful, Canada can produce and distribute it within the country.

Dr. Scott Halperin, director of the Canadian Center for Vaccinology at Dalhousie University, said the approval for the phase one clinical trial was exciting news.

Halperin said it’s expected the first study using less than 100 healthy volunteers between the ages of 18 and 55 would likely get underway within the next three weeks.

“In those studies the main purpose is look at the safety of the vaccine and how well it’s tolerated by the people who get it,” said Halperin.

He said the volunteers would be followed over the next six months and if they show a safe immune response to the vaccine, researchers will quickly transition into an expanded phase two study before the first phase is even completed.

“That will help speed things along because otherwise it could take years to go through the process,” Halperin said.

On May 19, the National Research Council of Canada announced that it would work with a Chinese company to try to develop its potential vaccine for COVID-19 more quickly.

CanSino Biologics, is already conducting human clinical trials for the vaccine that will be tested by the Halifax lab.

Trudeau also announced money for the Red Cross on May 16, pledging $100 million to help deal with COVID-19 relief, as well as work they do every year helping jurisdictions affected by floods and wildfires.