Bloomberg News

Air Canada Pilots Offered New Mediator Amid Strike-Vote Tally

February 15, 2012

Feb. 14 (Bloomberg) -- Air Canada’s and its pilots union were offered a new government mediator for contract talks after a legally mandated “cooling off” period ended and workers considered authorizing a strike.

Labor Minister Lisa Raitt urged both parties to continue working toward a deal and proposed a six-month process with the new negotiator, according to a statement today from her office. A government representative has already been working with the airline and its pilots, Raitt said.

The end of the “cooling off” period just after midnight today allows Air Canada’s pilots to strike and the carrier to lock them out, provided each side gives 72 hours advance notice. Both sides have said they will continue negotiations.

“A work stoppage at Air Canada is contrary to the best interest of hard-working Canadians, Canadian business and the already fragile economy,” Raitt said in the statement.

The Labor Minister thwarted a potential strike in October, referring a dispute between Air Canada and its flight attendants to a federal labor tribunal. In June, the airline’s striking service workers reached a tentative agreement minutes after the government introduced legislation that would have forced an end to the labor action.

A strike authorization would place the Air Canada Pilots Association, which represents about 3,000 pilots, on an “equal footing” with the company, Paul Howard, a union spokesman, said in a telephone interview yesterday. A strike or a lockout wouldn’t necessarily trigger a shutdown of the airline by either party, he said.

‘Business as Usual’

Air Canada is “confident that a disruption can be avoided,” said Peter Fitzpatrick, a spokesman in Toronto. “It remains business as usual, and customers can book and make their travel plans with confidence.”

Chief Executive Officer Calin Rovinescu said on a Feb. 9 conference call with analysts that the company intends “to not impose a new collective agreement in the near term.” Fitzpatrick said yesterday that those comments still stand.

Air Canada reached three separate agreements with unions that represent airline dispatchers, crew schedulers, mechanics, baggage handlers and cargo agents earlier this month. About 8,750 employees are covered by the accords.

Talks between pilots and the company began in October 2010. After rejecting a tentative agreement in May, the pilots are working under the terms of their last accord, which expired at the end of March. That contract froze pay at 2008 rates, the union said.

Low-Cost Unit

Pilots are resisting the possible creation of a low-cost unit to return to profit after the Montreal-based airline completed an expense-reduction plan last year.

Union president Paul Strachan said in an interview last month that Air Canada reintroduced “many controversial items” from the failed labor agreement, in addition to demanding “significant” concessions. He declined to be more specific.

Unresolved labor negotiations “will remain an overhang” on Air Canada stock, Cameron Doerksen, an analyst with National Bank Financial in Montreal, said in a Feb. 10 note to clients. “Successful resolution of the labor issues would likely be a strong positive catalyst for the stock once achieved.”

Air Canada dropped 4.6 percent yesterday to C$1.04 in Toronto. The shares lost 71 percent of their value in 2011.

--Editors: James Langford, Ed Dufner

To contact the reporter for this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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