07/31/2012 12:43 EDT | Updated 09/30/2012 05:12 EDT

Air Canada pilots bristle at arbitrator-imposed contract

The union that represents 3,000 of Air Canada's pilots is upset with an arbitrator's decision to side with the airline in a long-running contract dispute, and vows to continue the legal fight.

On Monday, a government-appointed arbitrator sided with Air Canada's final offer in the airline's dispute with the Air Canada Pilots Association, which represents the majority of the carrier's pilots.

The decision puts into place a five-year collective agreement effective until April 2016, after an acrimonious 19-month negotiating process came to no resolution.

"They may have won the decision, but in so doing, they lost us," Captain Jean-Marc Bélanger said in a note to union members obtained by CBC News. "This airline may never be able to recover the pilots' goodwill, let alone their best efforts."

The airline was poised to lock out the pilots earlier this year, but the move was short-circuited by the federal government, which passed legislation blocking either side from initiating job action and imposing a new contract.

That decision angered the pilots even more. Late Monday, the union said it has filed its legal challenge of that law in Ontario's Superior Court of Justice. "We are waiting for the court to tell us when our case is scheduled," the union said.

The pilots say the new deal could eliminate up to 1,100 jobs. The union says the deal puts in place provisions that will allow Air Canada to get rid of its entire fleet of Embraer planes and "contract out domestic and transborder flying."

The cutting of the Embraer fleet of 60 planes could cost up to 643 jobs, while a scaling back of 40 Airbus planes could cost an additional 473 pilot jobs.

"This is not good news for passengers," the union said in a memo to staff. "There is no hiding the toll this process has taken on the pilot group."

The union says even though passengers buy tickets from Air Canada, they will not necessarily get Air Canada flights operated by Air Canada pilots as a result of this deal.

The deal does, however, see nominal increases to pilot pay of between two and five per cent in each year of the contract's duration. By comparison, four of the company's top executives saw their compensation increase by between 18 per cent and 47 per cent last year alone, while CEO Calin Rovinescu got a $5-million retention bonus in March.

"This agreement preserves our pilots' compensation and benefits in the top quartile of the North American industry and will help ensure the sustainability of the company's defined-benefit pension plans," Rovinescu said in a release Monday.