Air Canada announces 3,600 war-related layoffs

Citing war-induced market volatility, Air Canada has announced tonight it's laying off 20 percent of its non-union workforce and about 10 percent of its unionized staff.

The following is the full text of an announcement made at 5:50 p.m.:

****************************************************************** Air Canada to Reduce Workforce by 3,600

MONTREAL, March 20 - Air Canada said today it is accelerating its transformation into a more efficient, lower cost airline by eliminating 3,600 jobs.

The airline will reduce its non-unionized workforce by approximately twenty per cent across all ranks including senior and executive management to be completed by the end of 2003 and will also reduce its unionized workforce by approximately ten per cent.

"The outbreak of war confirms our pressing need to achieve our target of $650 million in labour cost savings in addition to the job reductions announced today.

"I regret the impact of this decision on the many loyal employees affected but we need to accelerate our transformation into a leaner, lower cost carrier," said Robert Milton, President and Chief Executive Officer.

"As our record indicates we have been consistently ahead of the pack in adjusting to changing circumstances and we will take decisive action as required in the days ahead to deal with any increased volatility in the market." Air Canada has been progressively adjusting capacity over the past several weeks in view of reduced demand due principally to the threat of war in Iraq.

Capacity for the balance of March has been reduced by eight per cent and by 15 per cent for each of April and May as compared to last year with further capacity adjustments to be instituted as developments warrant.

The capacity reductions are equivalent to the removal of 18 aircraft from service in March and 35 aircraft in April and May. As a result of the war in Iraq and the existence of a "force majeure" situation, Air Canada will assess evolving geopolitical events and their impact on traffic demand as a basis for further capacity adjustments.

Forward bookings for the second quarter have been adversely impacted.

Discussions on the implementation of the reduction of unionized personnel will be undertaken with the unions in the coming days. Air Canada will continue monitoring the situation closely and will communicate significant developments relating to operations and corporate initiatives during the conflict as necessary.

This discussion contains certain forward-looking statements, which involve a number of risks and uncertainties.

As a result of many factors including acts or potential acts of terrorism, international conflicts, government regulations and government mandated restrictions on operations and pricing, fuel prices, industry restructuring, labour negotiations, the economic environment in general including foreign exchange and interest rates, the airline competitive and pricing environment, industry capacity decisions and new entrants as well as external events, actual results could differ from expected results and the differences could be material.

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