Government Will Try to End Worker Strike at Air Canada

The minister, Lisa Raitt, said in an interview that a prolonged strike at Air Canada, which has about 56 percent of the domestic air travel market, would impair Canada’s economy.

“As time goes by there will be a critical mass point where service will fall apart,” she said, adding that any legislation was unlikely to clear Parliament until the middle of next week at the earliest.

The airline moved swiftly to replace the 3,800 workers who went on strike early Tuesday morning. Those on strike are members of the Canadian Auto Workers union, and they were replaced by about 1,700 managers. The Toronto Star also reported that guards, not in uniform, from a private security firm were brought in to assist travelers with electronic check-in kiosks at airports.

Although Air Canada said that it would continue to offer all scheduled flights, airline officials made it clear that it would not be travel as usual.

In an online video for customers, Duncan Dee, Air Canada’s executive vice president and chief operating officer, encouraged travelers to check in online because “we expect long lineups at our kiosks.” He added, “We advise strongly against checking baggage in.”

There were some flight cancellations and delays on Tuesday, particularly during the morning flight rush, but it was not clear if they were related to the strike or other factors.

Negotiations between Air Canada and the union collapsed late Monday night over pension issues, Ken Lewenza, the president of the autoworkers’ union, said in an interview.

“Air Canada put a line in the sand and said these were the issues that were show-stoppers,” Mr. Lewenza said from Toronto. After meeting with a conciliator appointed by the federal government on Tuesday morning, Mr. Lewenza said that it was unlikely the talks would soon restart.

Air Canada did not respond to requests for comment.

Air Canada’s only nationwide competitor in the domestic market is WestJet, a low-cost carrier based in Alberta. But WestJet does not fly beyond the United States and the Caribbean, making Air Canada the country’s only full-service airline with overseas routes.

Air Canada is in negotiations with four other unions and locals, representing the balance of its work force of about 26,000. Last month, its pilots rejected a tentative contract with the airline. None of the other unions is in an immediate strike position under Canadian law.

Chris Murray, an analyst with PI Financial in Toronto, said that a pension shortfall of about 2.1 billion Canadian dollars was at the center of those negotiations. The federal government will require the carrier to eliminate that deficit over five years beginning in 2014.

“The problem is that when it comes time to write the check for that you need cash,” Mr. Murray said. Paying off the current shortfall will cut the marginally profitable airline’s cash flow by about 400 million Canadian dollars a year.

That amount, Mr. Murray said, may make it difficult for Air Canada to finance a planned purchase of Boeing 787 airliners.

Mr. Lewenza said that Air Canada was seeking to change a number of rules involving current employees’ benefits, particularly those governing when they would be able to collect a pension. The airline also wants to put future employees into a separate, less generous pension plan, he said.

Article source: http://www.nytimes.com/2011/06/15/business/global/15air.html?partner=rss&emc=rss