08/27/2011 06:02 EDT | Updated 10/27/2011 05:12 EDT

Air Canada Strike Possible As Flight Attendants Reject Agreement


MONTREAL - Air Canada suffered yet another labour setback on Saturday with word its flight attendants have rejected a tentative agreement reached earlier this month.

The union representing the roughly 6,800 flight attendants, the Canadian Union of Public Employees, said in a news release that 87.8 per cent of those who voted gave the tentative agreement a thumbs down.

"The results send a strong message to the company," Jeff Taylor, President of the Air Canada Component of CUPE, said in the news release. "We have heard our members loud and clear."

"After a decade of concessions, the membership has clearly said it wants a fair deal, especially since the company is in a much better financial position," Taylor added.

The union noted that turnout for the vote was high, with 78.6 per cent of members casting a vote.

A strike vote will be organized for next month, and union officials will meet with management as soon as possible on resuming talks, Taylor added.

Air Canada issued a terse release acknowledging the rejection, but offered little other immediate comment.

The airline has grappled with serious labour troubles this year with its customer service agents going on strike for three days.

The two sides reached an agreement and the strike ended after the federal government indicated it would bring in back-to-work legislation.

Air Canada pilots also rejected an agreement hammered out earlier this year and they have yet to negotiate a deal.

The airline is also negotiating with mechanics and baggage handlers, represented by the International Association of Machinists and Aerospace Workers.

A major issue in negotiations with all of the unions is over pensions.

The unions say the airline wants to establish a defined contribution pension plan for new hires, instead of the current defined benefit plan.

With defined contribution plans, the company's contribution is limited to a set, negotiated amount.

Payouts to retirees depend on the performance of the underlying investments. Defined benefit plans require a set amount to be paid to retirees.

Air Canada says high fuel costs are threatening its future profitability and it said this month it would raise fares and try to trim costs where possible to offset that.

The airline posted a $46 million loss in the spring quarter ended June 30 due to the cost of fuel.

But that was a big improvement over last year, when the losses were far greater.

Canada's largest airline and its regional partners carry about 31 million passengers annually to more than 170 destinations on five continents.