Coronavirus concerns prompt WestJet to cut capacity, freeze hiring

Yahoo Finance Canada
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WestJet Airlines is cutting capacity, instituting a hiring freeze and offering voluntary buyouts as passenger demand plummets due to the COVID-19 pandemic.

WestJet spokesperson Morgan Bell said in a statement Wednesday that the Calgary-based airline plans on cutting capacity by at least 12 per cent as it grapples with “significantly weakened demand” across its entire network.

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“The continued spread of coronavirus is a situation that has gripped the world and the effects on our business have been dramatic,” Bell said, adding that situation has been exacerbated by the continued grounding of the Boeing 737 Max jet, the company’s newest and most efficient aircraft.

“We are reviewing our network to both reduce and temporarily pause an additional 12 per cent, or more, of our capacity. Reductions may include domestic, transatlantic, sun destinations and transborder and we will continue to adjust as demand changes.”

Bell said the airline is also looking to cut costs by implementing a company-wide hiring freeze, pausing all discretionary spending, and offering voluntary buyouts to employees.

Airlines around the world have been slashing capacity, changing cancellation policies and bracing for deeper impacts as travellers opt to stay home amid the coronavirus pandemic.

Germany’s Lufthansa said it would cancel up to half of its flights after seeing a drastic drop in bookings. Delta Airlines said one-third of seats would be empty this month on flights within the United States. Southwest Airlines chief executive Gary Kelly said the outbreak might be worse for airlines than the terror attacks of 2001.

On Wednesday, Prime Minister Justin Trudeau announced a $1-billion economic support package on Wednesday to help both the health-care system and the economy at large cope with the effects of the coronavirus pandemic.

Air Canada’s chief executive Calin Rovinescu and WestJet’s chief executive Ed Sims spoke to Trudeau on Tuesday to discuss the impacts of the COVID-19 outbreak, but it remains to be seen if the government will offer assistance to the aviation industry. Spokespeople for Trudeau, Air Canada and WestJet did not provide additional details about Tuesday’s discussions.

“We’ve been reaching out to business leaders across the country to get a better idea of the impacts and potential impact on our economy,” Trudeau said at a press conference on Wednesday.

“The Finance Minister has been deeply engaged in that in the prep for the budget.”

On Tuesday, Air Canada announced that it would be suspending all flights between Canada and Italy over concerns about the coronavirus outbreak, which has prompted the Italian government to put the entire country under lockdown.

The airline, Canada’s largest, has not disclosed how much capacity it may cut as a result of the virus outbreak but airline industry analysts say the impacts will be significant. National Bank Financial analyst Cameron Doerksen estimates that the company’s 2020 earnings before interest, tax, depreciation and amortization (EBITDA) will be $2.2 billion, down from a previous forecast of $3.6 billion.

Air Canada, WestJet and Air Transat announced Wednesday that they would be implementing flexible cancellation policies that will allow passengers to cancel trips booked in specific time periods up to 24-hours before departure.

Air Canada will allow passengers who purchased tickets before March 4 for travel before April 30 to cancel flights up to 24 hours before departure free of charge. WestJet customers looking to change or cancel flights booked before March 3 for travel in March or April will be able to do so at no charge up to 24 hours before departure. Transat will waive change or cancellation fees made up to a day before departure for flights booked between March 4 and March 31.

With files from the Associated Press

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