Canadian airline Air Transat will permanently lay off at least 2,000 employees, representing around 40% of its total workforce, after the COVID-19 pandemic forced it to completely shut down operations for nearly four months between April and late July.

Air Transat president and CEO Jean-Marc Eustache said during a Sept. 10 conference call that the reductions must occur “unless the situation improves rapidly.” 

Two-thirds of the company’s 5,100-strong workforce is already laid-off on a temporary basis, with their wages partially funded by the Canada Emergency Wage Subsidy, which covers 75% of an employee’s wages—or up to C$847 ($642) per week—for Canadian employers harmed financially by the pandemic.

The Montreal-based leisure carrier was hit particularly hard by the pandemic early on, owing to its predominantly long-haul network, which features flights to European, Caribbean and Latin American vacation destinations from bases in Montreal and Toronto. 

Air Transat began furloughing staff in late March, before suspending operations entirely on April 1, after global border closures and restrictions by the Canadian government made most international travel impractical.

The airline recalled 1,000 employees on July 23 after resuming a limited schedule, which has since expanded to include 17 destinations in Canada, Europe, the Caribbean and Latin America, operated with a slimmed-down fleet of six Airbus A321neoLRs. 

The announcement came as Air Transat reported a net loss of C$45 million for the three-month period ending July 31, during which the carrier was operational for just nine days between July 23-31. Unsurprisingly, revenue plummeted by nearly 99% to just C$9.5 million, compared to almost C$700 million in the year-ago quarter.

Air Transat closed out the quarter with roughly C$576 million in liquidity, while total cash burn during the three-month period was C$156 million. The company said it is “in advanced discussions” toward obtaining additional financing, although its ability to secure the funds may be subject to approval from Air Canada, as part of a sale agreement that would see the Canadian flag-carrier acquire Air Transat for C$18 per share.

The takeover bid is still pending, with the two airlines awaiting a decision from the Canadian Government, as well as the findings of an in-depth competition investigation by the European Commission, expected to conclude by Dec. 11. Should the required regulatory approvals be granted, Air Transat expects the transaction to close during the 2020 fourth quarter.