Air Canada said Wednesday it would rehire 16,500 laid off staff thanks to a federal wage subsidy programme.

“The Canada Emergency Wage Subsidy is an extremely important program to help employees and employers during this time of crisis, and as one of Canada’s largest employers most affected by COVID-19, we want to acknowledge the leadership of the Government of Canada in introducing it,” said Calin Rovinescu, President and Chief Executive Officer at Air Canada.

The subsidy is proposed to cover 75% of salaries up to prescribed amounts. Air Canada believes it qualifies because revenues have dried up more than the minimum 30% required in the proposed subsidy.

The airline has cut capacity by 90% and laid off half its staff due to the effects of the COVID-19 pandemic. Travel has dried up as governments close their borders and passengers heed advice to eliminate all but the most essential travel.

Air Canada’s flight attendants union, the Canadian Union of Public Employees, welcomed the news, telling members they can chose to be on active duty or benefit from the wage subsidy, up to $847 per week.

“Your Local Presidents and Component Officers discussed the proposed program and we unanimously voted in favour to move forward,” the union said in an update to members posted on its website.

Unifor, which represents 3,000 laid off Air Canada employees, said the decision was a big step.

“Canada’s airline industry has been resilient in the face of past economic downturns and health crises in the past,” said Unifor National President Jerry Dias. “The same is not always true for airline workers who often bear hardship, loss of income, and deteriorating working conditions during the recovery process. This time must be different.”

“Depending on wage levels, many furloughed employees will get a somewhat higher amount under CEWS than they would otherwise receive from Employment Insurance payments plus they will maintain their health insurance and other benefits and stay more connected to our company during the Program Period,” said Rovinescu. “Once the crisis passes and passenger demand increases, we look forward to returning as many employees as possible to active status as we resume normal operations.”

Air Canada is also facing at least two potential class action lawsuits over policies adopted to cope with the pandemic. Those policies mean the airline is offering travel vouchers for cancelled flights, instead of refunding passengers their money.

The decision has sparked anger among passengers, some of whom are out thousands of dollars for flights they no longer plan to take.

The airline regulator – the Canadian Transportation Agency – has said the practice is acceptable, contrary to a ruling by the regulator in the United States mandating airlines refund fares for cancelled flights.

Air Canada said it plans to adopt the wage subsidy for the benefit of its 36,000 employees. Based on a rough calculation of publicly available data, the subsidy could be worth more than $350 million for the duration of the subsidy to Air Canada and its staff.

In its last annual report, Air Canada said it spent $3.2 billion on salaries, benefits, and wages, its second-largest expense, after fuel.