Labour Leaders Call For $7-Billion Bailout Of Canada’s Airline Industry

Labour leaders are calling on federal officials in Ottawa to provide immediate financial aid and rapid viral testing to the Canadian airline industry that has been devastated by the COVID-19 pandemic.

The heads of two pilots' unions and Unifor asked the federal government to offer carriers loans totaling $7 billion at a 1% interest rate. The 10-year credit plan being requested includes loan guarantees and direct financial aid, but no grants and aligns with the support extended by other countries, say union officials.

The unions also asked Ottawa to back approval and deployment of rapid COVID-19 tests for passengers as a step toward easing travel restrictions and quarantine rules.

The Canadian Union of Public Employees (CUPE), which represents 15,000 flight attendants, said a government stake in the companies should be a condition of any federal assistance, with parallels to Germany's $14-billion bailout of Lufthansa that saw the government take a 20% share of that airline. However, Unifor President Jerry Dias said a government stake should only come into consideration if an airline defaults on a loan.

Governments around the world have doled out $123 billion to assist the airline industry, Unifor said. Canada, on the other hand, has steered clear of sector-specific support, instead rolling out financial aid such as wage subsidies available to many industries at the same time.

Ottawa has also held off on requiring airlines to refund customers whose flights were cancelled due to the pandemic, potentially saving carriers hundreds of millions of dollars. Travel restrictions and dried-up demand continue to take a toll on the airline and tourism industries.

More than 30,000 employees have been laid off or furloughed at Air Canada (TSX:AC) and WestJet Airlines (TSX:WJA). Passenger numbers in Canada were down 90% year-over-year in July, though the 845,000 travelers made up nearly twice.