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Air Canada facing bumpy times over labour woes
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The Toronto Star-Vanessa Lu
Business Reporter
Air Canada’s labour woes just won’t go away.
The airline’s flight attendants have overwhelmingly rejected a tentative deal negotiated by their union and unanimously recommended for approval, echoing a similar rejection by the airline’s pilots this spring.
The federal conciliator working with the Canadian Union of Public Employees, which represents 6,800 flight attendants, has asked both union and management to a meeting in Montreal on Thursday.
Air Canada is not commenting. Spokesman Peter Fitzpatrick said only: “We’re assessing the situation and deciding on next steps.”
As CUPE prepares to hold strike votes in the coming weeks, beginning as early as Sunday, experts say bumpy times are ahead for the airline, which was hit with a brief three-day strike in June by its customer service agents.
“We’re going to see some brinksmanship from both sides,” said Joseph D’Cruz, a business professor at the Rotman School of Management. “They don’t need a strike now. They’re in a fairly delicate situation financially. And if they have a strike, they’re going to incur very significant losses.”
Air Canada employees say they made significant concessions, including taking pay cuts when the airline was on the brink of bankruptcy, and they were expecting to make gains in this round of bargaining now that the airline is in the black.
The CAW, which represents customer-service agents, quickly settled with the company when the Stephen Harper government signalled its willingness to bring in back-to-work legislation, although the most contentious issue of a different pension system for new hires was sent off for a review.
While the strike led to few delays, it would be much harder for the airline to operate if flight attendants or pilots walked off the job.
Earlier this month, Air Canada reported its second-quarter results, reducing its net loss to $46 million, compared with a net loss of $318 million a year ago. Operating revenue increased to $2.918 billion, up from $2.625 billion a year earlier.
Jeff Taylor, president of CUPE’s Air Canada component, was not available for an interview Tuesday. However, the airline’s plan to launch a discount carrier to vacation destinations is believed to be the biggest sticking point.
“Members of the union have sent a clear and strong message to Air Canada that they want a fair deal and that the tentative agreement was unacceptable,” said CUPE spokesman Pierre Ducasse in an email. “We are considering options that will get us the best possible collective agreement.”
The company needs both flight attendants and pilots to sign off on the low-cost carrier — where employees would be paid less than their mainline counterparts.
The pilots were so angry with their tentative deal that they ended up ousting several union officials. New elections were held and a new negotiating committee has been named though no dates have been set for contract talks, expected to resume this fall, said Paul Howard, a spokesman for the Air Canada Pilots Association.
Contract talks are also set to begin with the machinists’ union, which represents mechanics, ground crews and baggage handlers.
York University business professor Fred Lazar believes Air Canada must quickly win over both the flight attendants and pilots if it wants to get the discount carrier off the ground.
“Air Canada has to somehow cut a deal with these unions. They have to explain their position and the necessity of starting this low-cost carrier much better than they have,” Lazar said, suggesting open house forums with small groups of employees across the country.
“They have to come up with better offers for the current employees, the pilots and the fight attendants, such as job guarantees, so they will buy into a second tier of employees for the low-cost carrier,” he said.
Air Canada president and CEO Calin Rovinescu has told airline analysts the carrier won’t go ahead with the discount carrier, designed to compete on routes to Europe or sun destinations, unless it can ensure it remains cost-competitive.
The airline would need a lower pay structure and different work rules to compete with charters like Air Transat and Sunwing.
Lazar added Air Canada is facing more low-cost competition both internationally and domestically, so it needs to win union approval soon.
“They have to be in the market within the next 12 months, otherwise you’ll start seeing foreign low-cost carriers coming into Canada and slicing off a lot of the market,” he said.
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