OTTAWA – Air Canada is threatening to lock out its pilots next week in the midst of the spring break holiday for thousands of families in Ontario after making Thursday what it described its “final and best” contract offer.
The airline set a deadline of 12:01 a.m. ET on Monday, the same time as a strike deadline set by Air Canada’s (TSX:AC.B) largest union, which represents its ground crew and mechanics.
A work stoppage would throw a wrench into the travel plans for thousands of holidaying families, but Air Canada chief operating office Duncan Dee said airline needed to “bring closure to the ongoing climate of labour uncertainty.”
“We recognize and regret the uncertainty for our customers and we thank them for their patience and understanding. We will continue to provide further updates including information on contingency plans, as developments warrant,” Dee said in statement Thursday.
In response, Calgary-based rival WestJet (TSX:WJA) said Thursday that it planned to add extra flights to accommodate passengers that may otherwise be stranded in the event of work stoppage at Air Canada.
The pilots union, for its part, said it would put the latest offer from the airline to a vote, but urged its members to reject the deal.
Capt. Paul Strachan, president of the Air Canada Pilots Association, said the airline pulled a U-turn on the first day of the latest round of contract talks after committing to the six-month mediation process.
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“The corporation instead chose to table what it termed its ‘final’ offer only 23 days into the process, without any serious effort to bridge our differences by negotiating in good faith,” Strachan said.
“We think Air Canada pilots should be given the opportunity to tell the corporation directly what they think of its offer and its actions in this round of bargaining.”
Air Canada’s pilots last went on strike in 1998 in a dispute that lasted roughly two weeks.
Federal Labour Minister Lisa Raitt has been watching both negotiations and has moved swiftly in the past to intervene in threatened work stoppages at the country’s largest airline.
National Bank Financial analyst Cameron Doerksen said a work stoppage may force the federal government’s hand.
“Given the timing of the lock-out/strike during one of the busiest travel weeks of the year, we suspect that the government will have no option but to step in to prevent travel chaos across the country,” Doerksen wrote in a note to clients.
The threat of a lockout comes less than a month into what was supposed to be a six-month mediation process between the airline and its 3,100 pilots. An earlier, two-month effort by a representative of the Federal Mediation and Conciliation Service was unable to bring the two sides together.
The pilots voted 97 per cent in favour of a strike mandate last month.
Air Canada’s offer Thursday was for a five-year agreement with wage increases of two per cent in each of the first three years and three per cent in the final two years. The agreement also included a two per cent wage increase in second year following ratification as a productivity improvement offset and an acceleration of pensionable earnings earlier in a pilot’s career.
The airline and its ground crew also face a strike deadline of 12:01 a.m. ET on Mar. 12.
Air Canada’s largest union, the International Association of Machinists and Aerospace Workers, has said its 8,600 members will walk off the job if a deal cannot be reached. At dispute are wages and a sizable pension deficit, which the union says Air Canada has not dealt with, despite the sale of $2 billion in assets.
Air Canada’s employees have been trying to win back pay and concessions they gave up to help the airline restructure under bankruptcy protection in 2003 and 2004.
The pilots union has been flying under an expired 2009 agreement that froze their pay for more than two years and gave the airline hundreds of millions of dollars in relief from its pension funding obligations.
In September, the airline reached a deal with its flight attendants after a strike vote that prompted Raitt to warn of back-to-work legislation if a deal couldn’t be reached.
A similar threat ended a walkout by the airline’s customer service agents after just three days last year.
However Doerksen noted that a new contract won’t be the end of the story.
“Even without the labour issues, Air Canada faces major challenges including low profitability levels and ever-increasing competition,” he said.
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