Bloomberg News

Air Canada Rallies Most Since April on Pilot Contract

July 31, 2012

Air Canada (AC/A) rose the most in three months after a government-appointed arbitrator supported the carrier’s final contract offer to pilots, resolving a labor dispute dating to 2010.

The Class B shares climbed 5.4 percent to C$1.14 at the close in Toronto for the biggest intraday advance since April 27, according to data compiled by Bloomberg. Air Canada (AC/B) hadn’t settled at that level since Feb. 9.

The five-year agreement will remain in effect until April 1, 2016, Air Canada said yesterday in a statement, even as the 3,000-member Air Canada Pilots Association renewed its criticism of the government’s decision to intervene in the case by bringing in a federal arbitrator.

“The conclusion of this, the last outstanding agreement with our main labor groups in Canada, brings closure to a long and difficult round of labor negotiations,” Chief Executive Officer Calin Rovinescu said in the statement.

Arbitrator Douglas Stanley’s decision drew immediate criticism from the pilots union, which accused the government of “political meddling” and “heavy-handed legislation” to help secure new labor agreements. Air Canada has said it needed cost savings to help return to profit.

“Pilots are angry at the way they have been treated by the government and their employer,” union President Paul Strachan and Chairman Jean-Marc Belanger said in a statement. “This arbitration will only add to their disillusionment, creating a drag on Air Canada’s future performance.”

Labor Minister Lisa Raitt blocked a planned lockout of pilots in March by referring the matter to an arbitrator. The government barred a Machinists strike at the same time, after the union accused the airline of doing too little to bolster its pension program. In June, the arbitrator in the Machinists case chose the company’s final offer.

Pilots had been working under the terms of their last accord, which expired in March 2011, after talks dating to late 2010. The union has been resisting the possible creation of a discount unit that Air Canada has said would help reduce costs.

To contact the reporters on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net; 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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