(Bloomberg) -- Air Canada is asking Prime Minister Justin Trudeau’s government to intervene in contract negotiations with its pilots, seeking to avoid a shutdown of the airline next week.
The company is set to begin winding down operations Sunday, as talks with more than 5,000 unionized pilots appear to be at an impasse. Fifteen months of negotiations between Air Canada and the Air Line Pilots Association have stalled over wages.
The Montreal-based airline wants the government to request arbitration as soon as this weekend if there’s no breakthrough in negotiations.
ALPA’s local head, Charlene Hudy, said Air Canada’s call for arbitration is very disappointing. “Both parties should really try to get to the best deal possible without any government interference,” she said. The union seeks to close the wage gap with US pilots.
“Our goal is to reach a deal, but if there is no conclusion by Saturday, we ask the government to be ready to intervene to avoid these disruptions for Canadians,” Air Canada spokesman Christophe Hennebelle said Thursday in a phone interview. Arbitration is “a path that seems reasonable.”
The airline and the union were still in talks Thursday, though Hennebelle said there’s no certainty of reaching an agreement “because the union refuses to moderate its wage demands.”
The airline has already started to turn away orders for cargo services, and some passenger cancellations may begin Friday to prevent them from being stuck abroad, Hennebelle said.
Labor Minister Steven MacKinnon’s office said in an emailed statement that it’s committed to the collective bargaining process.
The government can ask the Canada Industrial Relations Board to force arbitration. Last month, the government asked the CIRB to step in when employees at the country’s two largest railways were locked out. The board gave a ruling that sent workers back to the job within days.
Air Canada has offered to boost the pay of pilots by about 30% within the next three years. The pilots haven’t received a raise since last year. The union will be in a position to issue a 72-hour strike notice on Sunday. Air Canada would be able to issue a lockout notice at the same time if there’s no deal.
Shares of Air Canada were up 1.6% to C$15.65 as of 3 p.m. in Toronto.
Economic Damage
A two-week strike by pilots may result in a real gross domestic product loss of C$1.4 billion ($1 billion), or C$98 million per day, according to Desjardins economists. “Air Canada is Canada’s leading air cargo carrier and largest airline,” LJ Valencia and Randall Bartlett said in a report. “A longer strike could have an even greater negative impact on the economy.”
Business leaders held a news conference in Ottawa on Thursday to press the government to do something if a deal can’t be reached. Echoing a letter sent to MacKinnon by dozens of groups earlier this week, they said Canada’s supply chains and international reputation have already been damaged by recent labor disruptions at railways and ports.
“We cannot allow for even a single day of a strike given the consequences on our already very fragile economy,” said Goldy Hyder, chief executive officer of the Business Council of Canada. “It would amount to government playing Russian roulette with our economy and we just can’t afford that at this time.”
--With assistance from Laura Dhillon Kane.
(Updates with union comment in fourth paragraph.)
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