Air Canada plans to rehire thousands of its workers recently laid off because of the COVID-19 pandemic, after negotiations with the federal government to confirm that the airline would qualify for a wage subsidy program.

As first reported by The Toronto Star, the airline announced that more than 16,000 of its recently laid-off workers will be put back on the payroll.

The rehiring will be retroactive to March 15, with the wage subsidy program expected to last until at least June 6.

Earlier this month, Ottawa expanded its wage subsidy program so that it could cover more companies, including larger ones. The program was originally targeted only at small- and medium-sized businesses, but it has since been extended to cover just about any Canadian company that has seen its revenues plunge by 30 per cent because of COVID-19.

Canada's airline industry has seen a catastrophic reduction in demand due to lockdowns to control the spread of the coronavirus that causes COVID-19. Air Canada says its seat capacity is down by almost 90 per cent since the crisis began.

Unions have signed off on the plan

"The Canada emergency wage subsidy is an extremely important program to help employees and employers during this time of crisis, and as one of Canada's largest employers most affected by COVID-19, we want to acknowledge the leadership of the government of Canada in introducing it," Air Canada president and CEO Calin Rovinescu said in a news release Wednesday morning.

"We are trying to keep as many of our employees as possible during the crisis and this measure will certainly help."

An Air Canada spokesperson told CBC News that all furloughed workers who qualify will be put back on payroll, but will not be brought back to active duty status as there is no work for them, given the schedule reductions. They will have access to their existing benefits packages.

A man uses hand sanitizer at Toronto's Pearson International Airport on Wednesday. Air Canada says its seat capacity is down by almost 90 per cent since the COVID-19 crisis began. (Nathan Denette/The Canadian Press)

Once operations return to normal, Rovinescu said, the company will return "as many employees as possible to active status."

The airline also said that all of the unions representing the company's various workers have signed off on the plan.

"This would be an important piece of relief for our members who have endured some very difficult times over the past several months," said Wesley Lesosky, president of the Air Canada component of CUPE, which represents 10,000 of the airline's flight attendants. "They are due for a little bit of good news."

Air Canada CEO and CFO defer salaries

Air Canada previously announced that it will temporarily stop buying back its own shares as a way to conserve cash during the current crisis, and the company's managers will also be getting reduced paycheques.

Rovinescu and the company's chief financial officer, Michael Rousseau, have agreed to defer their salaries while other senior executives will forgo between 25 and 50 per cent of theirs.

Members of Air Canada's board have agreed to a 25 per cent reduction, and all other Air Canada managers will have their salaries reduced by 10 per cent for the second quarter.

Other airlines

Air Canada's Calgary-based rival WestJet also cut its workforce by roughly half last month because of drastically reduced demand due to COVID-19. That airline told CBC News in a statement Wednesday it is "continuing to evaluate" the government's wage subsidy program, and will be watching as the government "finalizes the details."

"WestJet's top priority is the well-being of our employees and the continued viability of our airline," spokesperson Lauren Stewart told CBC News.

Edmonton-based Flair Airlines, which had laid off 130 people when the COVID-19 crisis started, followed Air Canada's lead on Wednesday, with the discount carrier announcing that all of them would be rehired at their full salary — beyond the 75 per cent that the government program provides.

"We resolved at the outset of the outbreak to uphold our civic responsibility to our passengers, employees and the communities we serve," said Flair vice-president Richard Williams. "We are proud that, with the help of the Canadian government, we can continue to meet the moment."

Toronto-based airline Porter Airlines has halted its flights due to COVID-19 and laid off its workers. In a statement to CBC News, the company said it is assessing whether it would qualify for the program and is engaged in "active discussions" with the government on the subject.

"If Porter is eligible for CEWS and there is a benefit for team members to participate, our intention is to take advantage of the program," said Porter spokesperson Brad Cicero. "Active discussions are taking place with the government to finalize details and understand outstanding questions."

CBC News also reached out to smaller Canadian airlines, including Sunwing and Air Transat, for comment on Wednesday, but those requests were not immediately returned.