Layoff Numbers

[rudder]

Projected Pilot layoffs from the largest passenger carriers as of June 01st (including CEWS) -

Air Canada - 600/4400 13.6%* (adding in pay reduction of 55 hours vs 75 hours produces a total effective layoff of 36.6%)
WestJet/Swoop/Encore - 1700/2268 74.9%
Jazz - 675/1530 44%* (active pilots approximately 1330 produces an effective layoff closer to 50%)
Skyregional - 227/287 79%
Transat - 100%
Sunwing - 100%
Porter - 100%

Industry specific aid in Canada - zero * (collateralized loans via EDC)

Industry specific aid in US - $50 Billion

Pilot layoffs from US passenger airlines - zero* (protections in place until Sept 30 only)

[TheStig]

Due to the CEWS no AC pilot is currently furloughed, the first 162 will be laid off on June 6th (or later if the program is extended).

At the start of the year AC projected a requirement for over 5000 pilots to crew the airline into next spring. The MOA restricts layoffs to no more than 600 until September, as Rudder mentioned with pilots being paid a reduced 55hours/month. After September further lay offs could take place depending on the number of pilots deemed to be surplus on the upcoming bid.

There are roughly 4480 seniority numbers including the 162 that joined in 2020, with 600 reductions and pilots being paid 55 hours as opposed to 80 and about 80 that took the ERIP who weren't already posted as retired:

5000 pilots x 80 hours = 400,000 Pilot hours/month

3800 Pilots x 55 hours = 209,000 Pilot hours/month

52% of the original planned flying hours. Obviously more than presently required.

Hard to predict the timeline of the bid and what the airline projects the timeline of any recovery to be, it would almost seem impossible to predict with any accuracy. You have to hope the April/May represents 'rock bottom' at 10% at this point. There are layoff payouts within the CA agreement that add to the cost of furloughing pilots for only short periods as well as retraining costs. In any case we'll get some insight into what AC is predicting within the week.

[rudder]

Hard to predict the timeline of the bid and what the airline projects the timeline of any recovery to be, it would almost seem impossible to predict with any accuracy. You have to hope the April/May represents 'rock bottom' at 10% at this point. There are layoff payouts within the CA agreement that add to the cost of furloughing pilots for only short periods as well as retraining costs. In any case we'll get some insight into what AC is predicting within the week.

Thx for the update/clarification.

US carriers now making inquiries of Treasury Dept to see if running and implementing results of a reduction bid (with layoffs delayed to Oct 01) would be compliant with the terms of the grants.

Certainly appears that a lot of planning is looking at 2021 rather than the next few months of 2020.

Best of luck.

[FL320]

Due to the CEWS no AT pilot is currently furloughed until June 6th (or later if the program is extended).

[rudder]

Due to the CEWS no AT pilot is currently furloughed until June 6th (or later if the program is extended).

Thx.

And just so everybody understands, an employer cannot claim nor can employee receive the CEWS subsidy via company payroll unless they have been identified as surplus and would otherwise be subject to layoff.

[indieadventurer]

And just so everybody understands, an employer cannot claim nor can employee receive the CEWS subsidy via company payroll unless they have been identified as surplus and would otherwise be subject to layoff.

That's incorrect. All employees are eligible for the CEWS, not just those identified as surplus, as long as their company has suffered a drop in gross revenues of at least 15% in March, and 30% in April and May.

[rudder]

That's incorrect. All employees are eligible for the CEWS, not just those identified as surplus, as long as their company has suffered a drop in gross revenues of at least 15% in March, and 30% in April and May.

Thx.

https://www.canada.ca/en/department-fin ... bsidy.html

[indieadventurer]

Regarding the governments 100% refund for employer EI and CPP contributions, that is only in effect for employees who are deemed surplus.

[Squid]

CEWS is still a lay-off. There is no work for these people. Is Transat paying the top-up portion? How about Jazz? Sunwing, Wj?

[HavaJava]

CEWS is just a way for the government to cook the books and keep the unemployment numbers artificially low. If/when the general public starts to wake up to the real impact of our reaction to this crisis there is bound to be backlash against government/healthcare officials.

Flame away if you must.

[BTD]

CEWS is just a way for the government to cook the books and keep the unemployment numbers artificially low. If/when the general public starts to wake up to the real impact of our reaction to this crisis there is bound to be backlash against government/healthcare officials.

Flame away if you must.

There are additional ways to view it, not that I think you are totally wrong. But if you use our industry as an example, there are retraining costs and time delays which will cost money when things do start to turn around. If you can take the little available flying and spread it out among the group, to keep everyone current there won't be large training time/costs associated when we restart compared to if more than half the industry is on EI. Obviously the longer this goes on, the value of that type of plan will decrease.

The example works well in our industry, but it applies to most industries. To layoff and hire/recall within a relatively short timeline has time/costs that will slow recovery, and the CEWS can keep workers qualified to pick back up relatively quickly.

[fishface]

Don’t be fooled. They’re rehiring people and putting them back on payroll but they’re not physically coming back to work or doing anything.
There will be retraining/certification costs for every licensed position even if TC gives extensions...they can’t last for months.

[confusedalot]

Someone correct me if I am wrong but the way I read the CEWS literature, maximum benefit is 847 per week. That will cover a bit of the payroll but most crew make more than that, so how long can operators sustain paying out the balance?
Stating the obvious, this is not good.

[rudder]

Don’t be fooled. They’re rehiring people and putting them back on payroll but they’re not physically coming back to work or doing anything.
There will be retraining/certification costs for every licensed position even if TC gives extensions...they can’t last for months.

Some airline employers are treating CEWS compensated employees as ‘inactive’. Not maintaining technical currency. Not scheduled for work. Not on standby. Not available to perform their regular job function. Some employers want RAIC, parking passes, other company issue assets returned.

I presume each employer is setting their own rules but for many employers the expectation of next status after CEWS is layoff.

[flyingcanuck]

Someone correct me if I am wrong but the way I read the CEWS literature, maximum benefit is 847 per week. That will cover a bit of the payroll but most crew make more than that, so how long can operators sustain paying out the balance?
Stating the obvious, this is not good.

Well, some operators aren't even topping up the rest

[rudder]

Someone correct me if I am wrong but the way I read the CEWS literature, maximum benefit is 847 per week. That will cover a bit of the payroll but most crew make more than that, so how long can operators sustain paying out the balance?
Stating the obvious, this is not good.

Well, some operators aren't even topping up the rest

The only operator that I have heard (anecdotally) is topping up to 100% is Flair.

Anybody else?

[DHC-1 Jockey]

The only operator that I have heard (anecdotally) is topping up to 100% is Flair.Anybody else?

I've heard Flair filed a grievance about the CEWS. I'm not sure of the details though.

CEWS is still a lay-off. There is no work for these people. Is Transat paying the top-up portion? How about Jazz? Sunwing, Wj?

At SWG, we have only just received word that the company will participate in the CEWS program. We definitely won't be getting a top-up though.

[boeingboy]

At SWG, we have only just received word that the company will participate in the CEWS program. We definitely won't be getting a top-up though.

Source?

Sunwing wasn't taking part...
I'd still like to see some aid package that helps the actual airlines survive this.

[goldeneagle]

I'd still like to see some aid package that helps the actual airlines survive this.

With my tax dollars funding payroll and no money spent on fuel they don’t need any more. Any company that can’t survive a couple of months with the two largest expenses gone doesn’t deserve to stay in business

[boeingboy]

With my tax dollars funding payroll and no money spent on fuel they don’t need any more. Any company that can’t survive a couple of months with the two largest expenses gone doesn’t deserve to stay in business

That's the dumbest thing I've heard in a while. Even your high and mighty Air Canada wont make it long without some sort of bailout.

A couple of months??? Get a grip.

Tax dollars spent on payroll?? - There was no payroll until this government sham came along. A lot of companies shed a large part or even all of their payroll. What about leases, rent, taxes, hell - I'd hate to see Air Canada's electric bill for the month. Lots of other huge expenses and no income....75% of the worlds airlines wont last more than 3 months without help. And almost all wont make it past 6 months. Our airlines need an aid package now!

[Gilles Hudicourt]

Let's stay respectful and polite please. We can do it.

The aircraft leases when they are leased, or bank payments when they are purchased, are very high.

As I recall, correct me if I am wrong, airliners are leased somewhere between 2% and 8% of their value (per year), according to their age, condition and demand. So a 50 million dollar aircraft at 5% can be leased for about $200,000 per month. if you have a fleet of identical 150 aircraft, you are looking at 30 million per month in leases.......

Some larger newer aircraft are over a million per month...... they pay themselves off very well with the fuel they save when they are flying a lot, but become an anchor around your neck when they are idle.....

[Eric Janson]

I suspect that Leases will be renegotiated.

No Leasing company wants to have huge fleets of aircraft they cannot do anything with.

If set up correctly there are Termination Clauses built into Leases.

I have heard of large jets being leased by the hour.

There may not be very much said publicly but I'm sure there are discussions taking place.


Employee costs may be a lower priority right now - but that will probably change imho.

[DHC-1 Jockey]

At SWG, we have only just received word that the company will participate in the CEWS program. We definitely won't be getting a top-up though.

Source?
Sunwing wasn't taking part...

I am the source. I work for Sunwing and read the memo.

[goldeneagle]

Let's stay respectful and polite please. We can do it.

The aircraft leases when they are leased, or bank payments when they are purchased, are very high.

As I recall, correct me if I am wrong, airliners are leased somewhere between 2% and 8% of their value (per year), according to their age, condition and demand. So a 50 million dollar aircraft at 5% can be leased for about $200,000 per month. if you have a fleet of identical 150 aircraft, you are looking at 30 million per month in leases.......

Some larger newer aircraft are over a million per month...... they pay themselves off very well with the fuel they save when they are flying a lot, but become an anchor around your neck when they are idle.....

An under capitalized company lives on cashflow and payments, when the cashflow dries up, they are dead. A well capitalized company owns the assets. They may not generate revenue when parked, but they dont drain cash at a significant rate either. These are two different philosophies for running a business. Anybody can make money in a booming economy running an under capitalized business, just have to keep cashflow net positive. It takes a completely different management style to weather the downturn and come out the other side with a viable business.

For publicly traded airline company, there is no excuse for running on skinny cashflow margins with respect to leased aircraft. Do like WestJet did when they first went public. Very tightly controlled limited release of public float shares at the IPO. Then over the next few years they released more shares into the market, usually by selling a large block of shares with one year restrictions to a pension fund, and those monies were used to pay for airplanes. This option is available to all public companies, so there is no excuse for a downturn to leave them sitting on huge lease payments they cant cover. Parking airplanes you own wont bankrupt the company, parking airplanes locked into large lease payments will. Anybody who has spent any amount of time in aviation knows that the downturn comes on average once a decade. Recent history shows 2001, 2008 and now 2020. The true sign of how well an airline is managed is not how they did in 2019, it's how they will look at year end 2020 and beyond.

We are one month into the downturn, nobody knows yet how long and how deep it will really be. But if the company is already in a state they need government money to stay afloat, I would posit then it wasn't a viable company to begin with. They aren't burning fuel, and government funds are covering payroll, so the two largest ongoing expenses are not draining cash reserves. If cash reserves and available credit cant keep the lights on for a couple months, then it isn't and likely never was a viable company. Bankrupt, just didn't realize it yet.

[goldeneagle]

I have heard of large jets being leased by the hour.

A bunch of years back I had a couple clients that were operating that way. Airframes leased from a company on a per flight hour basis. Engines on power by the hour from a different company. The only thing actually owned by the airline was the paint for the logo. The interior was interesting, if you knew where to look you could find logos from at least 3 different companies that had that airframe before the current operator at the time.