March 21, 2012 / 3:07 PM / 6 years ago

Quebec could sue Air Canada, Ottawa over Aveos

Boeing's 787 Dreamliner aircraft is seen during a media preview at an Air Canada hangar at Pearson Toronto International Airport in Toronto, March 2, 2012. Air Canada has purchased 37 of the Boeing 787 and are to be delivered in 2014. REUTERS/Mark Blinch

(Reuters) - Quebec’s government said on Wednesday it was considering taking legal action against both Air Canada and the federal government to keep operations going at the Montreal facility that services the airline’s planes.

The facility was once part of Air Canada’s in-house maintenance unit and is now owned by private company Aveos Fleet Performance Inc. Aveos obtained bankruptcy protection on Monday and on Tuesday it ceased Canadian operations and laid off all of its Canadian employees. It had about 2,600 employees across the country, including 1,700 workers in Montreal.

Aveos has blamed much of its financial difficulty on Air Canada. It said the airline reduced the work it sent to Aveos, particularly in the last two months, precipitating a crisis.

Air Canada countered on Tuesday, saying it had given Aveos financial and other assistance.

The federal law that has governed Air Canada’s operations since its 1988 privatization requires it to “maintain operational and overhaul centers” in Montreal as well as Winnipeg, Manitoba, and Mississauga, Ontario.

“We will do all, all, all we can to keep the operations open, to see how we can help the workers and the company,” Quebec Premier Jean Charest told the province’s legislature.

“We will examine all the options available, including the possibility of taking legal action against the federal government.”

The government of the province of Manitoba, where more than 400 jobs were lost, said it was touch with Quebec on Wednesday morning.

“We are eager to coordinate our response to the situation with Quebec,” said spokeswoman Rachel Morgan. She said it was too early to say whether Manitoba would take legal action.

Air Canada said late on Tuesday that it would send planes scheduled for maintenance this week to an alternative service provider, Premier Aviation, in Trois-Rivières, Quebec, as part of a contingency plan.

The airline, Canada’s biggest, said it will ensure that all of its planes are properly maintained, including three aircraft currently at Aveos facilities. “We are confident the plan will avoid disruption to our customers,” it said.

Sam Hamad, Quebec’s economic development minister, told the Quebec legislature he had met with representatives of both Aveos and Air Canada on Tuesday and asked what the government could do to keep the plant open.

“We will not stop there. Together with the minister of justice, the attorney-general and the legal team, we are looking at all the options that exist for legal recourse against Air Canada to put pressure on Air Canada as quickly as possible,” he told legislators.

Aveos workers demonstrated outside the Air Canada and Aveos headquarters in Montreal on Tuesday. Some protesters threw eggs, rocks, wooden planks and Christmas lights at cars headed toward the airline’s facility.

A spokeswoman for Denis Lebel, the federal transport minister, had no immediate comment. On Monday spokeswoman Genevieve Sicard expressed sympathy with workers affected by Aveos’s decision, while noting Aveos’s “decisions are that of a private company.”

Air Canada, which is trying to cut costs and change the way it operates, already has two labor contract disputes headed to binding arbitration, with its pilots and machinists unions. It was faced with a simultaneous strike and lockout earlier this month until the federal government intervened and ended up passing legislation to prevent either a strike or a lockout.

Reporting By Allison Martell in Toronto and David Ljunggren and Randall Palmer in Ottawa; Editing by Peter Galloway

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