04/03/2012 01:43 EDT | Updated 06/03/2012 05:12 EDT

Quebec threatens Air Canada with legal action over commitments to preserve Aveos

The Quebec government is threatening legal action against Air Canada over its alleged failure to comply with a federal law that requires the continued operation of maintenance services in Montreal.

Justice Minister Jean-Marc Fournier told a news conference in Quebec City that the carrier had previously given assurances that its heavy maintenance operations would be continue to be performed in Montreal — effectively by Aveos Fleet Performance, the sucessor to a former subsidiary sold off by the airline.

He said the airline also committed to seek the prior approval of the House of Commons before allowing its maintenance services to be diverted from Quebec, Winnipeg and Toronto.

The province's Liberal government said Tuesday that it has ordered the country's largest carrier (TSX:AC.B) to clarify how it intends to pursue the activities it had formally committed itself to in the past.

The government said it could seek unspecified legal action if the airline fails to respond within 10 days.

"That Air Canada has chosen to have some of its work completed by someone other than its own employees does not change its commitment and performance obligations, legal obligations, to maintain facilities and activities taking place in Montreal," he said.

Referring to the words of the former Air Canada president Pierre Jeanniot and former transport minister Don Mazankowski, Fournier said the airline's commitment was very clear when the law was passed in 1988.

"Air Canada was then assured that these overhaul facilities, which are the type of what was done at Aveos, will be held in Montreal," he told reporters.

The minister said he has obtained legal advice that differs from the federal Justice Department's view that Air Canada didn't violate the law.

"On several levels, it is possible that it doesn't agree with what was written in the federal legal advice," he said. "Their opinion is their opinion."

Air Canada didn't specifically respond to Quebec's legal threat but repeated past claims that it is in full compliance with all aspects of the federal law by operating its own maintenance operations in Canada.

"Air Canada's compliance has been confirmed by the courts and the federal government in a legal opinion from Justice Canada to Transport Canada," stated spokeswoman Isabelle Arthur.

In Ottawa, Transportation Minister Denis Lebel reiterated that the federal government has no power to save the Aveos jobs.

"Air Canada is a private company in the same way (as) Aveos," he said in the House of Commons.

"We presented a legal opinion which confirms that Air Canada respect the laws and we will let the Air Canada people take their business decisions."

Aveos announced plans to liquidate its assets under the Companies Creditors' Arrangement Act on March 20, citing a decline in business from Air Canada.

The government's decision to pursue a legal strategy regarding Aveos was well-received by the union representing its former employees.

Meanwhile, the Manitoba government said it was monitoring Quebec's action.

"Our first concern is for the 400 Manitobans who can't be at work. There's the obvious strain on those families but a loss of this many jobs also impacts the communities," said Rachel Morgan, spokeswoman Entrepreneurship Minister Peter Bjornson.

She said Manitoba believes the federal government must uphold provisions of the Air Canada Participation Act and maintain heavy maintenance facilities in Winnipeg.

"The province will do everything it can to preserve the Aveos maintenance facilities and the jobs for the employees, either by a restructured Aveos or another company," she said in an email.

Meanwhile, the union has formally established a committee to help workers find other jobs or obtain the necessary skills to do so.

"Our people, in addition to not having a salary, cannot get unemployment insurance because Aveos gave no termination," added International Association of Machinists and Aerospace Workers spokesman Jean Poirier.

Quebec Economic Development Minister Sam Hamad added that discussions are underway with various partners to preserve Aveos' assets and to potentially find a new operator.

The Quebec Federation of Labour's Solidarity Fund is one of the groups trying to revive the aircraft maintenance, repair and overhaul company that employed 2,600 workers across Canada, including 1,800 in Montreal.