March 24, 2020 / 3:38 PM / 15 days ago

UPDATE 2-Air Canada to furlough up to 600 pilots as coronavirus slashes flights -union letter

(Adds comment from WestJet)

By Jeff Lewis and Allison Lampert

TORONTO/MONTREAL, March 24 (Reuters) - Air Canada has reached an agreement that would allow the airline to furlough up to 600 pilots because of plummeting traffic due to the coronavirus, according to a letter from the union reviewed by Reuters on Tuesday.

The country’s largest carrier is slashing capacity as the coronavirus outbreak forces many governments to impose travel restrictions.

The agreement covers six months from April through the end of September, according to the letter dated Monday.

Air Canada did not immediately respond to requests for comment.

Carriers are making unprecedented cuts to flights, costs and staffing while stepping up calls for emergency aid from governments to save jobs.

Canada is working on a financial aid package for the country’s struggling airlines.

Canada’s privately held WestJet Airlines said on Tuesday that 6,900 employees would leave the company, with 90% departing voluntarily. The country’s second-largest carrier had about 14,000 employees before the announcement.

Global passenger capacity fell by 35% last week, the worst since the start of the crisis, according to data from airline schedules firm OAG, which said deeper cuts were likely in the coming weeks.

Air Canada reached the agreement as its April schedule was reduced by 80% and the carrier has suspended its leisure service Rouge, the union letter said.

The deal “represents our best efforts to balance our responsibility to our members, alongside the requirement for the company to reduce its costs as quickly as possible in line with the schedule reduction and for its long-term viability.”

Pilots on furlough continue to accrue seniority and would be later recalled in order of seniority.

Air Canada shares were up about 20% in afternoon trade, but still down more than 60% this year.

The Air Canada Pilots Association, which represents 4,400 members, said in a statement on Tuesday that the agreement would reduce pay across the group, simplify contract language to allow pilots to retire earlier and provide “for orderly redundancies” up to a maximum of 600 positions in the coming months.

“Due to the complexity of pilot training, the precise number of positions immediately affected is still unclear and we will be working with Air Canada in the coming days and weeks to better understand the situation,” Captain Michael McKay, chair of the Air Canada Pilots Association, said in the statement.

Reporting by Jeff Lewis in Toronto and Allison Lampert in Montreal; Editing by Denny Thomas, Lisa Shumaker and Peter Cooney

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