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Nav Canada warns air traffic controllers that job cuts are coming as pandemic crushes revenue

Air traffic controllers are being warned that layoffs are coming as Nav Canada pursues a “full restructuring” in response to a revenue slump caused by the pandemic, CBC News has learned.

CBC News has obtained a confidential memo sent internally to air traffic controllers today. In it, Ben Girard, Nav Canada’s vice president and chief of operations, told staff that the company has seen a $518 million drop in revenue compared to its budget.

He said he’s been pushing the federal government for help but — unlike some other countries — Canada has not released an industry-specific bailout package yet.

“We anticipate that until air traffic returns to higher levels, which will not occur until the end of this fiscal year, we will continue to operate in a daily cash negative position and this will be made worse as funding from the [Canadian Emergency Wage Subsidy] program is ratcheted back,” Girard wrote. 

Girard did not say in the memo how many air traffic controllers will lose their jobs, or which airports will be affected.

“I know this is very difficult news to hear. It is also very difficult news to deliver,” he wrote. “This is a decision that has been made at my level based on what needs to be done to ensure Nav Canada’s financial sustainability.”

‘We’re facing years of a downturn in air traffic’

Nav Canada manages millions of kilometres of airspace over Canada and used to provide air navigation services for more than 3 million flights a year. It’s funded through service fees paid by air carriers.

In November, Canadian air traffic was down 54 per cent compared to the same time period in 2019, according to the memo.

“Over the summer and fall months, the outlook for the aviation industry has deteriorated significantly and it has become increasingly clear that we’re facing years of a downturn in air traffic that is much larger and broader in scope than we all initially believed, and will be much deeper and longer than any downturn in the history of the industry,” wrote Girard.

Nav Canada says it is conducting studies of air traffic control towers in Whitehorse, Regina, Fort McMurray in Alberta, Prince George in B.C., and Sault Ste. Marie and Windsor in Ontario which “will result in workforce adjustments.” The company also is looking into closing a control tower in St. Jean, Quebec.

Nav Canada air traffic controllers were told today a workforce adjustment is coming because “the aviation industry has deteriorated significantly.” (Jonathan Hayward/Canadian Press)

Government ‘pressed’ for help 

The company has been focused on securing liquidity and tapped into the Canadian Emergency Wage Subsidy to pay up 75 per cent of employees wages, he wrote. Girard added these payments are being reduced and will run through December, but Nav Canada isn’t sure if it can continue receiving that wage support.

“While an extension for the CEWS program through June 2021 was recently announced, NAV CANADA’s eligibility is uncertain,” wrote Girard.

Girard said the government has so far failed to come up with a bailout package for the airline sector, despite “significant lobbying.”

Last month, the Globe and Mail reported the federal cabinet is working on a package for the airline sector that would include low-interest loans. 

Since September 22, Girard wrote, the company has cut more than 700 managers and employees — 14 per cent of its workforce. It also let go 159 students earlier in the pandemic, he added, and in November cut even more, “leaving just a few in the system.”

Along with the cuts, seven air traffic control towers are being considered for a downgraded level of service and another 25 sites that are already Flight Service Stations — which provide only advisory services — could face more cuts.

Nav Canada’s board of directors has cut its fees by 20 per cent, and executives and managers have dropped their salaries by up to 10 per cent, Girard wrote.

These cost reductions, and access to government support through the wage subsidy program, have saved the company $200 million since March 1, he added. 

“However, that number still pales in comparison to the $518 million reduction in revenues as compared to budget,” wrote Girard.

“Despite these cost-containment efforts, we find ourselves in a situation where we expect our revenues to continue falling far short of our costs for several years, and we continue to require further cost-containment measures and indeed, a full restructuring of our business.

“In an environment where 30 per cent of costs are associated with ‘things’ and 70 per cent of costs are associated with ‘people’, when all possible cuts with ‘things’ have been done, any further cuts will directly affect people.”

Girard added that he hopes the company can bring back some of the laid-off staff once the pandemic passes.


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