BUSINESS

Labour Minister puts brakes on planned March Break work stoppages at Air Canada

03/08/2012 01:56 EST | Updated 05/08/2012 05:12 EDT
OTTAWA - Federal Labour Minister Lisa Raitt stepped in Thursday to prevent a work stoppage at Air Canada that would have thrown the travel plans of thousands of families into chaos at the beginning of a holiday week.

"Our government's concerned that the work stoppages are going to have an effect both on our national economy and of course on the Canadian travelling public," the minister said.

"We all know that it's March break, especially in Quebec, in Ontario and the following week after in British Columbia. And we know this can have an effect on Canadian families, especially since this is a really peak travel season."

Raitt sent the dispute between the airline and two of its unions — the pilots and ground crew — to the Canadian Industrial Relations Board to see how a work stoppage would affect the health and safety of Canadians.

"It is still a valid question to me, especially when it comes to passengers and cargo and that's exactly why we're going to be sending it over to the CIRB," Raitt said Thursday.

While the board reviews the case, the airline cannot lock out its employees and the unions cannot start a strike.

It is the same manoeuvre that Raitt used when it appeared Air Canada's flight attendants would go on strike last year, but the CIRB never made a decision on that matter.

Air Canada confirmed that there would be no disruption of service and its full schedule would remain unchanged.

Canada's largest airline (TSX:AC.B) had threatened earlier Thursday to lock its pilots out on Monday after they rejected the airline's latest contract offer, while the International Association of Machinists and Aerospace Workers, which represents ground crew and mechanics, had set a strike deadline on the same day.

The pilots union and the machinists are the last two unions with which Air Canada needs to reach an agreement.

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 Air Canada Pilots Association has said it 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.

Raitt urged both sides to negotiate a deal or submit to a binding process to settle their disputes and avoid a work stoppage.

The pilots union has said it will put the airline's latest offer to a vote, but urged its members to reject the proposed agreement.

Capt. Paul Strachan, president of the Air Canada Pilots Association, said the minister undermines the bargaining process when she intervenes.

"It is like negotiating with the monkey with the organ grinder standing behind you with the sword of Damocles over your head," he said.

"Air Canada needs to behave like the private sector corporation that it is and stop running to the government every time it has a problem, which, as you can see, is often."

Meanwhile, the machinists union has said its main issues are wages and a sizable pension deficit, which Air Canada has not dealt with, despite the sale of $2 billion in assets.

Dave Ritchie, IAMAW Canadian general vice-president, said without the threat of a strike or lockout, the negotiation process will be dragged out.

"I'm disappointed because I think what she's done is that she's taken the pressure off both sides to come to an agreement," Ritchie said.

"I would have thought that had the pressure been there and building that we would have had a better chance of reaching an agreement sooner."

In September, the airline reached a deal with its flight attendants after a strike vote prompted Raitt to intervene.

A walkout by the airline's customer service agents represented by the Canadian Auto Workers lasted just three days last year after the minister threatened back-to-work legislation.

National Bank Financial analyst Cameron Doerksen said employee relations have been severely damaged at Air Canada.

"A major concern for Air Canada, once the new contracts are finally in place, will be its labour relations and employee morale, both of which have undoubtedly suffered significantly throughout this process," Doerksen wrote in a note to clients.

"Even without the labour issues, Air Canada faces major challenges including low profitability levels and ever-increasing competition."