Federal wage subsidies meant to help businesses cope with the COVID-19 pandemic could be worth more than $614 million to Canada’s airlines and their employees, according to an analysis compiled by Western Aviation News.
Airlines have been hammered in the past month, watching their bookings and revenues tank as provinces and countries closed their borders and passengers heed government advice to stay home.
Air Canada is down to a little more than 100 departures per day across the country while Westjet offers a little more than double that number, though in practice, Westjet cancels dozens of flights each day. Those schedules are between 80 and 90% smaller than they were at the beginning of March.
The federal subsidy was crafted by Ottawa to help businesses hurt by the pandemic weather the storm. Any business or nonprofit that can prove it lost more than 30% of its revenues, can qualify to have 75% of an employee’s salary covered, up to a maximum of $847 per week. The subsidy is retroactive to March 15 and applies until June 6.
Let’s look at what that means for each airline.
Air Canada has announced it would rehire 16,500 people laid off as a result of the pandemic and use the subsidy to cover all 36,000 of its employees. The subsidy will pay up to $10,164 per employee over 12 weeks, although that is a maximum, and many of the lowest-paid crews don’t make that much at the airline. Still, the wage subsidy will be worth in the range of $360 million for the airline and its staff.
Westjet announced April 8 that it would put 6,400 of 6,900 laid off people back on the payroll thanks to the wage subsidy. “I am grateful for the hard work of the government of Canada, and of all governments across Canada, to provide businesses like ours with the tools to continue operating through these most challenging of times,” Westjet President and Chief Executive Officer Ed Sims said April 8 in announcing the move.
Sims did not say whether they subsidy would apply to all staff across the airline, though it would be a logical move. If Westjet applied the subsidy to all 13,500 people on its payroll, it would be worth more than $130 million until June 6.
Transat effectively shut down its air operations as a result of governments closing their borders when the pandemic hit. Eighty per cent of its staff was laid off. The airline makes its money catering to Canadians’ holiday wishes and has a negligible domestic service.
The operator announced Thursday it would use the subsidy to rehire those people who will continue to stay home. The subsidy will cover between $45 and $50 million in salaries at Transat.
Air Canada’s main regional airline – owned by Halifax-based Chorus Aviation – announced it would rehire 3,000 people laid off as a result of the pandemic and apply the subsidy to its 5,000 staff. That would cover in the range of $45 million for the airline and its staff.
Ontario regional carrier Porter Airlines was another carrier that completely shut down operations when COVID-19 hit. It will rehire some 1,500 people, even though they will be left on “inactive” status. Between $10 and $15 million will be paid to staff thanks to the subsidy.
Canadian ultra low-cost carrier Flair will also take advantage of the wage subsidy to put 130 people back on the payroll and has announced it will follow federal guidelines to top up their salaries to 100% of what they earned pre-pandemic.
While it is not clear that Flair will apply the subsidy to all staff, it could be worth up to $4 million for the airline and its employees.
Vacation airline Sunwing has also shut down air operations and laid off thousands of people. It has not said whether it will take advantage of the subsidy, and did not reply to a request for comment.
There are limits to this calculation.
Many jobs in the airline industry are low-paid. Air Canada, for instance, recently advertised ground handling jobs for a little more than $14/hour, meaning anyone who worked a regular 40-hour week would get less than the federal maximum.
Most Canadian airlines also subcontract their ground handling operations, which have been drastically scaled back. With the exception of Air Canada, who does most of its ground handling in-house, those employees are not covered in these calculations.
There are also a number of smaller regional or privately-owned carriers who have not announced their intentions, meaning the overall value of the wage subsidy could be higher.
The good news is, most of Canada’s airlines have announced a recall of laid off employees thanks to the subsidy. That means more than 35,000 people have a job today that they didn’t have just days ago.
Before the subsidies were announced, more than 44,000 people had been laid off in Canada’s aviation industry, not including thousands of people who work at airports preparing meals, cleaning toilets, and providing tourist information.
The wage subsidies are a lifeline for the beleaguered airlines, though it’s not at all clear if it will be enough to keep the moribund industry afloat.
So far, only one airport, Montreal, has announced it would use the subsidy to keep employees on staff.