Air Canada plans flight cancelations as pilots’ strike nears

Air Canada says it’s making plans to suspend flights beginning on Sept. 15 if a new contract is not reached with the union representing more than 5,000 pilots. 

Canada’s largest airline said Monday the parties remain far apart after more than a year of talks, and a work stoppage is “increasingly likely.”

The pilots will be in a legal position to issue a 72-hour strike notice at 12:01 a.m. Montreal time on Sunday. Air Canada would be allowed to issue a lockout notice at the same time if there’s no agreement. “Flights throughout the system would be progressively canceled over three days,” the airline said, with a complete shutdown happening Sept. 18.

More than 110,000 people travel each day with Air Canada. The airline has introduced a rebooking policy for customers with travel between Sept. 15 and Sept. 23.

The Air Line Pilots Association “remains inflexible on its unreasonable wage demands,” Air Canada said in the statement. Bloomberg News reported last week that the airline has offered to boost the pilots’ pay by about 30% within the next three years, including an immediate minimum 20% increase. The pilots haven’t received a raise since last year.

The union’s local head, Charlene Hudy, called on the airline to get back to the bargaining table and “get serious” as pilots seek to close a pay gap with their US peers. “Now, because of their corporate greed, Air Canada is preparing to disrupt flights and inconvenience passengers,” she said in a statement.

Air Canada said it has offered arbitration to the union and that it “would look to the government to intervene as it has in recent labor disputes.” In August, the Canada Industrial Relations Board, following a request by the federal labor minister, ordered workers from the country’s two largest railways to go back to work and to settle their contract demands via arbitration.

The government urged the airline and union to reach a deal at the table. “It is incumbent on both parties to work together to reach an agreement,” a spokesperson for Labor Minister Steven MacKinnon said in an emailed statement. “Our government firmly believes in the collective bargaining process and Canadians are counting on the parties to get a deal.”

The airline’s cargo operations would also be impacted by a suspension of flights. “Each day, Air Canada Cargo carries in the belly holds of its aircraft and air freighters perishable or live commercial goods, components for manufacturers and other time-sensitive items for Canadians,” said the airline, adding it has already begun limiting the acceptance of some of these goods. 

Financial Impact

“The early days of the Covid shutdown are likely a reasonable reference point for the financial impact,” National Bank Financial analyst Cameron Doerksen said in a note to clients. “In the second quarter of 2020, the first full quarter of travel restrictions, Air Canada lost about C$9 million ($6.6 million) in earnings before interest, taxes, depreciation and amortization per day.”

Doerksen said a 30% increase in pilots’ pay could be “manageable,” but wages beyond that point could “potentially result in Air Canada being at a significant cost disadvantage to its Canadian peers.”

Shares of Air Canada were down 1.5% to C$15.02 at 12:39 p.m. Toronto time. They’ve fallen about 20% this year.