WestJet cutting jobs and slashing flight capacity by 1/3

WestJet is cutting jobs and slashing its flight capacity by a third because of what the airline calls "instability in the face of continuing federal government travel advisories and restrictions."

The Calgary-based airline said in a release Friday that up to 1,000 of its employees will be impacted by "furloughs, temporary layoffs, unpaid leaves and reduced hours."

Ottawa recently changed the rules to require anyone coming into Canada to have a negative COVID-19 test in order to be allowed into the country. As soon as that happened, WestJet CEO Ed Sims said the airline saw "significant reductions in new bookings and unprecedented cancellations."

The airline lobbied the government to alter or delay implementation of the new rules, but Ottawa ultimately went ahead with them as planned.

"The entire travel industry and its customers are again on the receiving end of incoherent and inconsistent government policy," Sims said.

"We have advocated over the past 10 months for a co-ordinated testing regime on Canadian soil, but this hasty new measure is causing Canadian travellers unnecessary stress and confusion and may make travel unaffordable, unfeasible and inaccessible for Canadians for years to come."

CUPE, the union that represents WestJet's staff, told CBC News in a statement Friday that 175 flight attendants at the main airline will be laid off, and an additional 24 more at Swoop, their discount carrier. The individuals in both groups were initially laid off in April before being recalled over the summer, and are now being laid off for a second time during the pandemic.

Calgary-based independent airline analyst Rick Erickson, who does not have a business relationship with WestJet, says the move doesn't come as a surprise.

"With these new COVID tests required of all arriving passengers, and just how very quickly they rolled that out, it wasn't as though they they gave the air carriers or the industry itself much lead on this," he said.

Asked about the WestJet layoffs and support for the industry, Prime Minister Justin Trudeau pointed to the $1.5 billion in aid for aviation through the federal wage subsidy and other measures.

"We know that the airline industry is extremely hard-hit by the COVID-19 pandemic. People shouldn't be travelling and that, of course, is a direct challenge for the airline industries to manage through," he told reporters in Ottawa.

"At the same time, we've made it very clear that we expect people to be reimbursed [for cancelled flights], we expect regional routes to be protected, we expect certain things from the airline industry," he added. "Those discussion about how we're going to make sure that people are protected as we offer supports are continuing."

WATCH | Trudeau on support for airlines, WestJet cuts:

Government programs such as the wage subsidy have helped airlines like WestJet, but compared to other countries, Erickson said the federal government has done considerably less for the industry. He expects more cuts to come unless something dramatic changes.

"I'm expecting the other shoe to drop, an Air Canada one, and I think it will be a loud bang when it hits the ground [because] they'll be every bit as much impacted in the same way that WestJet has been."

About 230 weekly departures cut

In addition to the job cuts, the airline is also slashing about 30 per cent of its flights for February and March. That includes cutting its number of international flights from 100 this time last year to just five now.

About 230 weekly departures have been cut, including about 160 domestic routes. About a dozen normally permanent flights to sunny destinations out of Edmonton, Calgary and Vancouver have been cut, and seasonal service to the following locations has also been cut:

• Antigua.

• Aruba.

• Barbados.

• The Caribbean island of Bonaire.

• Huatulco, Mazatlán and Ixtapa, Mexico.

• London, Gatwick.

• Nassau, Bahamas.

• Port of Spain, Trinidad and Tobago.

• San Jose, Costa Rica.

• Tampa, Fla.

• Turks and Caicos.

The flight reductions mean the airline will only have about 150 flights per day. That's about what WestJet had in June of 2001.

The cuts come on the heels of the airline's decision announced in October to shut down almost all of its operations in Atlantic Canada.

Isabelle Dostaler, dean of faculty of business administration at Memorial University in St. John's, says the airline business is tough at the best of times in a country as huge as Canada. "You add a crisis like the one they're going through and it [becomes] impossible," she said in an interview.

Dostaler says she understands why airlines need to cut costs, since the huge drop in demand for air travel has wiped out their revenue for nearly a year. But ultimately, there will be no return to normal while the virus is not contained, so limiting travel is best for all in the long run.

"The aviation lobby wants more relaxed rules [but] we know that tough rules work," she said. "It has worked for the island of Newfoundland."

Brooke Dobni, a strategy professor at the Edwards School of Business at the University of Saskatchewan, says that much like everyone else in this pandemic, the airlines are just doing whatever they can to survive long enough to get back to better days.

"It's a balancing act and they're literally trying to keep as many good employees as they can, keep planes in the air [and] keep the ones on the ground maintained and ready to go with things open up," he said in an interview. "But they're scrambling."