WestJet Threatens More Route Cuts in Response to Trudeau’s Covid-19 Rules

With coronavirus cases continuing to rise across Canada, Prime Minister Justin Trudeau recently announced that travellers will need to provide negative Covid-19 tests before boarding flights bound for Canada. The new rules took effect Thursday, and it appears that they are not sitting well with some of the country’s major airlines.

After the latest travel requirement was announced, WestJet revealed that it suffered significant reductions in new bookings and cancellations. The airline company’s CEO, Ed Sims, noted that the new measure is causing travellers needless confusion and stress, and may even make travel less affordable and inaccessible for some Canadians.

In response to the latest health measures, WestJet said it will have no choice but to make further cuts to its domestic and international flights, as well as reduce its workforce capacity by an additional 30%. The airline’s latest measures would impact approximately 1,000 employees, while decreasing its flight numbers to levels not seen in nearly 20 years. The employment reductions would come at an inconvenient time for Canada’s economy, especially as the latest employment data suggests that the labour market is not recovering as strongly in the new year.

The latest cuts are expected to be made through to March, putting WestJet’s capacity 80% lower compared to last year’s levels. Over 230 additional weekly departures are expected to be eliminated, including 160 domestic flights and 11 international flights. This would put the daily number of international flights to five, compared to 100 in 2019. The company also plans on issuing a freeze on any new hiring.

Canada’s federal government, along with the country’s airline sector, have been in tense talks regarding a potential relief bill since the onset of the pandemic back in March. Official discussions commenced in November, with Transport Minister Marc Garneau exclaiming that any government aid will come attached with conditions, including issuing refunds for unused tickets. The federal government has also remained adamant that airlines do not cut any more domestic flights.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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