Air Canada, flight attendants at impasse with strike looming

The prospect of a systemwide work stoppage by Air Canada‘s unionized flight attendants loomed large on Friday with a strike deadline just hours away, despite a government plea for the two sides to return to the bargaining table.

Canada’s largest carrier has said it expects to cancel 500 flights by the end of the day, ahead of a threatened strike just before 1:00 a.m. ET on Saturday, leaving some 100,000 passengers to find travel alternatives.

Air Canada has asked the minority Liberal government of Prime Minister Mark Carney to order both sides into binding arbitration. The Canadian Union of Public Employees, which represents the attendants, said it opposed the move.

“The mere prospect of ministerial intervention has had a chilling effect on Air Canada’s obligation to bargain in good faith,” said the union, which made clear in advance that it would reject the idea.

FlightAware data showed Air Canada had cancelled 174 flights as of 1:00 p.m. ET on Friday (1700 GMT). A further 94 were delayed.

The carrier’s 10,000 flight attendants are gearing up to walk off the job over stalled contract talks. The union is demanding higher wages and compensation for unpaid work.

A strike would hit Canada’s tourism sector during the height of the summer travel season and test Carney.

Recording studio owner Robyn Flynn, 38, told Reuters that her Friday afternoon flight from St. John’s in the province of Newfoundland and Labrador to Montreal had been delayed twice. Despite the inconvenience, she said she backed the attendants.

“They deserve a salary increase …and if our flight gets cancelled, I 100% blame Air Canada, not the flight attendants,” said Flynn, travelling with her three-year-old daughter.

The Canada Labour Code gives Jobs Minister Patty Hajdu the right to ask the country’s Industrial Relations Board to impose binding arbitration in the interests of protecting the economy.

Although the board is independent, it routinely agrees to request for arbitration once it has studied the matter, a process that can take a few days.

The Toronto region Board of Trade called on Ottawa to step in, saying a strike would hurt Canada’s global reputation.

Under Justin Trudeau, Carney’s predecessor, the government intervened quickly last year to head off rail and dock strikes that threatened to cripple the economy.

“(Ottawa) might decide to use that, but it’s not as pressing an economic issue for the country as when the railway or the ports were on strike,” said Rafael Gomez, director of the University of Toronto’s Centre for Industrial Relations and Human Resources. “The stakes are not as fraught.”

In a note, TD Cowen analyst Tom Fitzgerald estimated a three-day strike could cost the airline C$300 million in EBITDA, referring to earnings before interest, depreciation, taxes and amortization.

Shares in the airline were trading up by almost 1.50% at 12:45 p.m. ET on Friday on the stock exchange.

The dispute hinges on the way airlines compensate flight attendants. Most have traditionally paid them only when planes are in motion.

But in their latest contract negotiations, flight attendants in North America have sought compensation for hours worked, including for tasks such as boarding passengers and waiting around the airport before and between flights.

Air Canada and its low-cost affiliate Air Canada Rouge normally carry about 130,000 customers a day. Air Canada is also the non-U.S. carrier with the largest number of flights to the U.S., despite recent cutbacks in travel there from Canada due to trade tensions.