03/15/2012 05:45 EDT | Updated 05/15/2012 05:12 EDT

Air Canada back-to-work legislation passes Senate, sends disputes to arbitration

OTTAWA - The back-to-work bill to send a pair of Air Canada (TSX:AC.B) labour disputes to binding arbitration passed the Senate on Thursday and was quickly given royal assent.

The legislation covers about 8,600 mechanics, baggage handlers and other ground crew at Air Canada (TSX:AC.B) and about 3,000 pilots.

Labour Minister Lisa Raitt had proposed the back-to-work legislation on Monday, saying a work stoppage at the airline would hurt the economy.

"Our government took decisive action to ensure the economic recovery is not harmed and stays on course," Raitt said in a statement announcing that the bill had become law.

"This legislation will bring resolution to the current ongoing labour disputes that were threatening air service operations and ensure much-needed service to air travellers and businesses alike."

Besides ensuring that Air Canada flights continue, the legislation sends all unresolved issues to binding arbitration.

The IAMAW represents a unit of 8,200 employees engaged in technical, maintenance and operational support functions whose current collective agreement expired March 31, 2011. The ACPA represents 3 000 pilots whose current collective agreement also expired on March 31, 2011.

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

Flights at Air Canada were set to stop this week after the airline said it would lock out its pilots and the machinists union said it would strike in the midst of the key March Break period.

However Raitt stepped in and blocked a work stoppage by referring the matter to the Canada Industrial Relations Board.