Up To 2,000 Jobs To Be Cut

The bleeding continues for the North American airline industry. Air Canada plans to cut up to 2,000 jobs from its ranks by the end of 2008, as the carrier slashes capacity to cope with the slumping economy and record high fuel costs.

The Canadian Press reports the airline will cut capacity by at least seven percent this fall. The subsequent jobs cuts will affect all areas of operations, said Air Canada CEO Montie Brewer Tuesday.

"The loss of jobs is painful in view of our employees' hard work in bringing the airline back to profitability over the past four years," Brewer said in a statement. "I regret having to take these actions but they are necessary to remain competitive going forward. Air Canada, like most global airlines, needs to adapt its business and reduce flying that has become unprofitable in the current fuel environment.

"If fuel prices remain at current levels, we can anticipate further capacity reductions," Brewer added.

Following in the steps of most major US airlines -- including American, United, Delta, Northwest, and US Airways -- Air Canada will gradually implement capacity reductions over the next several months, targeting a 2 percent cut in domestic capacity by Q1 2009. US transborder capacity will take the biggest hit on a percentage basis, with a 13 percent drop; and international travel will be curbed by seven percent, for an overall seven percent cut across Air Canada's operations.

International routes to be cut include Toronto to Rome non-stop service following the summer travel season, and elimination of non-stop service from Vancouver to Osaka, Japan.

Air Canada noted every time the price of oil increases by $1 per barrel, it costs the carrier an extra $26 million a year. Fuel costs comprise 30 percent of Air Canada's overall expenses.

Not helping matters are federal and provincial fuel excise taxes, security fees and airport charges, which Air Canada said "that are amongst the most expensive in the world today."

With the cuts, Air Canada is predicting a flat year for overall capacity growth... between one percent and minus one percent, down from its earlier predictions of as much as a 2.5 percent growth over 2007 levels.

FMI: www.aircanada.com