Air Canada is warning layoffs are part of its plan to reduce costs as more and more countries around the world impose travel restrictions to prevent the further spread of COVID-19.

The company expects capacity to be reduced by about 50 per cent in the second quarter compared to last year and is targeting $500 million in cost reductions and capital deferrals to mitigate financial losses.

“A combination of significantly lower jet fuel prices, the projected cost savings associated with capacity reductions, including workplace reductions and other programs, and a general cost reduction program is expected to mitigate between 50 and 60 percent of the company's total revenue loss for the second quarter of 2020,” Calin Rovinescu, chief executive officer of Air Canada, said in a release Monday.

Air Canada also said it suspended its share buyback program earlier this month and drew down its US$600 million credit facility.

“COVID-19 presents the global airline industry with unprecedented challenges, compounded by uncertainty as to the extent of its effects.” Rovinescu said. “The crisis facing our industry is worsening as countries around the world adopt increasingly severe measures, national lockdowns and travel restrictions.”

He added he expects the federal government will unveil some form of support for the Canadian airline industry, as various countries around the world have done, but said Air Canada wasn’t going to wait to implement a mitigation plan in the meantime.

This weekend, WestJet Airlines Ltd. revealed it’s also evaluating options to ensure its financial viability including asking employees to consider voluntary leaves, unpaid vacation and reduced work hours.