BUSINESS

Air Canada Strike: Delays Expected As Customer Service Agents Walk Off The Job Over Pensions, Wages

06/14/2011 05:28 EDT | Updated 08/14/2011 05:12 EDT
CP

UPDATED: THE CANADIAN PRESS -- TORONTO — Travellers across the country should brace for longer lines and more time holding for help on the phone now that Air Canada’s customer service agents and other airport workers have walked off the job.

Some 3,800 employees went on strike just after midnight eastern time after talks between their union and the airline failed to reach an agreement.

At Canada’s largest airport, Pearson International in Toronto, arriving travellers were greeted by several striking workers waving banners.

The workers were occupying a large section of the sidewalk outside the busy terminal, but were not impeding access to the facility.

Inside, Air Canada staff and managers were assisting travellers and guiding them toward self-serve terminals.

The Canadian Auto Workers union said negotiations went down to the wire but there no common ground on the key issues of pensions and wages.

"The whole bargaining committee is disappointed because I can tell you our objective was not to have a strike, our objective was to have a deal," union president Ken Lewenza told The Canadian Press.

Lewenza said he was particularly frustrated because discussions seemed to progress positively through Monday in the run up to the strike deadline, but the airlines position on the employee pension plan proved too much of a barrier for the union.

"For them to stick to their position after considerable debate is surprising and disappointing,” he said. “I don’t think Air Canada put the customers front and centre on this particular dispute."

Representatives from Air Canada did not respond to requests for comment on the strike early Tuesday.

But in a statement issued after the walkout began, Air Canada chief operating officer Duncan Dee said the airline is "very disappointed that an agreement for a new contract has not been reached."

Dee said the airline is ready "to resume discussions at any time to achieve a negotiated settlement."

In the interim, said Dee, the airline has a contingency plan in place involving more than 1,700 managers to assist at airports and call centres.

“We will continue to operate our full schedule and all bookings will be honoured,” he said.

The airline urges passengers to check its website because a high volume of calls could make for a long wait to get through to its call centres, which are largely operated by employees who have now walked off the job.

Technology is also expected to help since self-service tools on the website can be used for making bookings along with self-service check-in at airports.

Despite the airline’s contingency plans however, Federal Labour Minister Lisa Raitt has said she’s concerned about the potential impact of a work stoppage on Canadians and on Canada’s economic recovery.

Meanwhile, Lewenza said the union would continue to reach out to Air Canada to try to come to an agreement both sides were happy with.

“We want a deal,” he said, adding that striking employees would be back at their post as soon as an acceptable agreement was reached.

"We have a responsibility to push for an agreement because it’s in the interests of our members of course, but more importantly it’s in the interests of the customers who need the services of Air Canada."

The union aired its concerns on the pension issue well before the strike began.

The airline had proposed new hires would receive defined contribution pension plans instead of the defined benefit plans current employees have.

The company’s unions agreed to accept numerous concessions worth billions to help the company to survive, but they insisted their defined benefit pension plans be saved.

Defined benefit plans are designed to provide retirees with a predictable income, but they expose the airline to additional costs if the pension fund’s assets aren’t able to pay for the benefits.

With defined contribution plans, the airline’s contribution is limited to a set, negotiated amount and payouts to retirees depend on the performance of the underlying investments.

Union officials have said the airline wants to also gut the pensions of current workers.

Air Canada has about $13 billion in pension commitments to 26,000 active employees and 29,000 retirees. Estimates in January found that the plan is underfunded by about $2.1 billion.

Air Canada was forced into creditor protection from April 2003 to September 2004, due in part to the cost of dealing with the company’s pension deficit.

On the Toronto Stock Exchange, Air Canada’s shares closed down 7.7 per cent, or 15 cents, at $1.79 in Monday trading.

By Diana Mehta, The Canadian Press