WestJet Airlines Ltd. says it will permanently lay off 3,333 employees as part of a major restructuring amid the coronavirus pandemic that has devastated the travel industry.
The company plans to consolidate call centre activity in Alberta, restructure its office and management staff and contract out operations at all but four of the 38 Canadian airports where it operates, WestJet said in a release Wednesday.
“Throughout the course of the biggest crisis in the history of aviation, WestJet has made many difficult, but essential, decisions to future-proof our business,” said CEO Ed Sims, calling the changes “unavoidable.”
About 2,300 airport customer service agents and baggage handlers will lose their jobs, according to CUPE union official Chris Rauenbusch.
Some 600 office and management staff in Calgary will be cut within a month or so, he said. “The head office is already desolate.”
Another 433 call centre representatives will be laid off in Moncton, Halifax and Vancouver, he said.
WestJet, which went private after Toronto-based Onex Corp. bought the company in December, had employed some 14,000 workers just before the pandemic struck. About 4,500 active employees will remain on the payroll after the layoffs.
The company said preferential hiring interviews for some of the 2,300 WestJet airport workers now facing layoffs will be a priority in selecting airport partners.
The pandemic saw the airline suspend most of its schedule — including all international trips — in late March, running at less than 10 per cent capacity.
Canadian airline revenue streams have shrunk to a fraction of 2019 levels, with fleets parked and border shutdowns ongoing even as domestic travel demand gradually starts to pick up.
Canada, unlike countries including France, Germany and the United States, has held off on sector-specific support for carriers. Instead Prime Minister Justin Trudeau has rolled out financial aid available across industries, including the federal wage subsidy and loans starting at $60 million for large companies.
In an memo to staff Wednesday afternoon, Sims said the dearth of government funds along with a ”patchwork” of provincial and federal travel advisories and constraints on non-essential domestic and international travel are compounding a “weak demand environment.”
Robert Kokonis, president of Toronto-based consulting firm AirTrav Inc., said the relative lack of financial support “may run the risk of incurring lasting damage on our aviation and travel sectors.”
A healthy domestic airline sector is critical in a sprawling country with a handful of far-flung, high-density population centres, he said.
“And we need to have carriers to link Canada with the rest of the world. If we have a major carrier fail, you’re not going to replace that lift overnight,” Kokonis said. “This message from WestJet today has got to be the eye-opener.”
The company is increasing reliant on flights to the U.S. following a partnership with Delta Air Lines, cemented in a joint venture announced in February.
Last week fewer than 7,500 passengers arrived at Canadian airports from the U.S., down more than 98 per cent from a year earlier, according to the Canada Border Services Agency.
International passenger numbers were down 95 per cent compared to a year earlier, the agency said Wednesday.
Chief executives from 27 Canadian companies in sectors ranging from aviation to banking and telecommunications have called for a “measured” reopening of the skies that would see travel resume across all provinces and between select countries.
An ailing travel sector also hurts local businesses, Kokonis said.
“It’s airports, it’s ride-hailing services like Uber and Lyft, it’s taxis, it’s hotels, it’s tour operators. It’s your kayak and canoe outfitter at Lake Louise that has nobody to rent a boat to.”
Manitoba and the Maritime provinces continue to restrict interprovincial travel, though the four Atlantic provinces announced plans Wednesday to create a “bubble” that allows residents to travel within region, removing a 14-day isolation period.
Travellers arriving in Canada from abroad must self-isolate for two weeks.
Last week, Trudeau extended a ban on non-essential travel between Canada and the U.S. until at least July 21.
The announcement came as European Union countries began to reopen their borders to EU and some non-EU members.
“It’s not desperate yet, because the airlines can navigate through the next months,” said Jacques Roy, a professor of transport management at HEC Montreal business school.
“But the restrictions will have to come to an end and have travel resume sometime.”
WestJet earlier this week said it had halted its pursuit of a labour code exemption that would have facilitated permanent mass layoffs.
WestJet will have to provide unionized employees affected by the latest round of layoffs with payment in lieu of notice, Rauenbusch said.
This report by The Canadian Press was first published June 24, 2020
Christopher Reynolds, The Canadian Press