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Air Canada to use government subsidies to keep employees on payroll

April 8 (Reuters) - Air Canada said on Wednesday it intends to adopt the government’s wage subsidy for its 36,000 Canada-based workforce, in a bid to keep its employees on payroll as the carrier wrestles with the coronavirus fallout.

The Canadian government had recently announced the Canada Emergency Wage Subsidy (CEWS) to reimburse employers suffering revenue declines exceeding 30%.

The CEWS aims to help employers keep and return Canadian-based employees to payrolls for a period between March 15 to June 6, in response to challenges posed by the COVID-19 pandemic.

The Canadian carrier now expects its cost reduction and capital deferral program to be at least $750 million for the year, up from its previous target of $500 million.

“Depending on wage levels, many furloughed employees will get a somewhat higher amount under CEWS,” Chief Executive Officer Calin Rovinescu said.

Major airlines across the world have announced layoffs, wage cuts and unpaid leave for staff amid the pandemic which has dried demand and brought travel to a virtual halt.

Air Canada had said in March it would cut second-quarter capacity by 85%-90%, place about 15,200 unionized employees off duty and furlough about 1,300 managers, beginning on or about April 3. (Reporting by Sanjana Shivdas in Bengaluru; Editing by Shailesh Kuber)