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Air Canada is temporarily laying off 16,500 people – half its work force – as Canada’s largest airline parks planes and slashes capacity by up to 90 per cent amid the COVID-19 pandemic that has closed most international borders.

Calin Rovinescu, Air Canada’s chief executive officer, said the Montreal-based airline’s response to the crisis was “extremely painful.”

"The unpredictable extent and duration of the Covid-19 pandemic requires a significant overall response,” he said in a statement. “We believe that the temporary nature of these reductions, many achieved through voluntary programs, combined with other mitigation measures, will position us to restore regular operations as soon as the situation improves."

Air Canada said the “temporary” job losses affect 15,200 union members and 1,300 managers, effective April 3.

Air Canada and its domestic and international rivals have suspended most flights amid the outbreak of the deadly flu, which closed most borders and quarantined millions of people.

“Other than returning the remaining Canadians home and continuing a skeleton operation, we will be essentially ‘closed for business’ for most of the quarter,” said an internal Air Canada memo obtained by The Globe and Mail. “We are also in discussion with the federal government regarding some form of airline industry support measures. However, at this time, we have no visibility on the scale, scope and timing of any such measures.”

Other Canadian carriers have suspended operations and laid off most staff, including Porter Airlines, Sunwing Airlines and Air Transat. WestJet Airlines has announced 6,900 job losses, and is operating some domestic flights.

Air Canada’s announcement comes on the same day Prime Minister Justin Trudeau provided more details on government efforts to limit layoffs in all sectors by subsidizing wages up to 75 per cent.

Air Canada said it will assess the program’s impact on its announced layoffs and furloughs.

Canadian airlines, unions and airports have called for government bailouts to offset the devastating losses of passenger revenues.

WestJet spokeswoman Lauren Stewart said the carrier is awaiting details of the announcement and will assess its impact.

In addition to the layoffs, Air Canada said it was cutting and deferring capital costs by at least $500-million, drawing on credit lines worth $1-billion and suspending share buybacks. Mr. Rovinescu and deputy CEO Michael Rousseau have agreed to forgo their salary, while other senior executives will take pay cuts of up to 50 per cent.

Mr. Rovinescu was paid $10.5-million in 2018 in salary and stock compensation. In 2019, he sold stock options worth $52-million, after the share price soared.

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