Air Canada, union talks break off; strike looms

TORONTO/OTTAWA Tue Sep 20, 2011 6:28am EDT

Striking Air Canada employees stand inside Terminal One at Pearson International Airport in Toronto June 14, 2011. REUTERS/Mike Cassese

Striking Air Canada employees stand inside Terminal One at Pearson International Airport in Toronto June 14, 2011.

Credit: Reuters/Mike Cassese

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TORONTO/OTTAWA (Reuters) - Talks between Air Canada (ACb.TO) and its flight attendants' union broke down late on Monday, making a strike at Canada's biggest airline a near certainty beginning Wednesday.

Canadian Union for Public Employees CUPE.L, which represents 6,800 flight attendants at Air Canada, said that both union and management have walked away from the bargaining table without a deal.

However, the union said it hopes to start talks on a better foot as early as Tuesday morning.

Flight attendants will be in a legal strike position starting at one minute past midnight on Wednesday September 21, 2011, unless a deal is reached before then, CUPE said in a statement.

A strike by cabin crew at Air Canada is likely to severely disrupt flights at the world's eighth-biggest airline, which flies to more than 150 destinations in Canada, the United States and internationally.

However, any job action is likely to be short-lived.

Earlier on Monday, the Canadian government said it would legislate flight attendants back to work if last-ditch contract talks broke down, citing concerns that a strike at the country's largest airline would damage a still-fragile economy.

"We have put notice on the order paper today that we have the intention to introduce legislation should there be a work stoppage," Labour Minister Lisa Raitt told reporters.

The earliest the government could introduce the legislation would be on Wednesday, Raitt said after a meeting in Ottawa with the two sides in the dispute.

She said the parties told her they were hopeful of reaching a settlement and averting a strike.

"They're close enough to get a deal, they should be able to do it," Raitt said. "They told me they can come to a deal."

In June, the Conservative government introduced back-to-work legislation to deal with striking Air Canada call-centre and check-in staff, citing concerns about the strike's impact on the economy. In the end, a deal was reached before the bill was passed.

Raitt said it could be several days before the new legislation is passed, in the event of a strike, because of the ability of the opposition to delay it.

The current dispute centres on pensions for new hires, wages and working conditions. The two sides have been talking for more than 24 hours to prevent a strike, which could start at one minute past midnight on Wednesday.

The airline says it would operate on a partial schedule if there is a strike, using code-share flights operated by partner airlines.

Flight attendants at Chorus Aviation's (CHRb.TO) Jazz, which operates short-haul Air Canada Express-branded flights under contract, belong to a separate union.

WestJet Airlines Ltd (WJA.TO), Air Canada's main domestic competitor, has said it would add extra flights if there is an Air Canada strike.

ARBITRATOR RULES ON PREVIOUS DISPUTE

In a possible clue to how one issue behind the flight attendants' strike could be resolved, an arbitrator ruled this weekend on a final holdover from June's strike, imposing a compromise where new staff will earn a pension that includes both defined-benefit and defined-contribution portions.

Air Canada flight attendants have rejected a tentative deal that would have sent the issue of pensions for new hires to arbitration.

Air Canada was pushed to the brink of bankruptcy two years ago, and it blamed heavy pension funding demands for its troubles. Its pension deficit is C$2.1 billion.

The airline argues that it faces higher costs than its rivals, in part because its roots as a state-owned corporation mean it is subject to Canada's Official Languages Act and must be able to serve customers in either English or French.

Canada's Commissioner of Official Languages said on Monday that Air Canada needs to improve its bilingual services and the airline pledged to develop a three-year plan to improve its compliance with the law.

The pro-union New Democratic Party said it had not decided whether to delay passage of any new back-to-work legislation as it did in June with a government bill to force Canada Post workers back on the job.

The NDP is the largest opposition party in the House of Commons. It does not have the votes to block legislation, but it can delay a bill's passage by several days. (Reporting by Allison Martell, Randall Palmer and Louise Egan; Additional reporting by Nicole Mordant in Vancouver and Sakthi Prasad in Bangalore; Editing by Janet Guttsman, Rob Wilson and Eric Beech)

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