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(Reuters) - Air Canada said on Tuesday its dispute with the union representing its 8,600 mechanics, baggage handlers and cargo agents will be handed to a government arbitrator after the two sides were unable reach a settlement in 10 days of mediated talks.
Both sides will now prepare their final offers for the arbitrator, Michel Picher, to consider.
Picher has less than 90 days to choose either the offer from Air Canada, the country's biggest airline, or the one put forward by the union, the International Association of Machinists and Aerospace Workers.
Air Canada said in a statement that the mediated talks were constructive and progress was made in a number of areas.
The two sides have been in on-and-off talks since the union's collective agreement expired on March 31, 2011.
As the months went by, relations became more strained, resulting in the union issuing a strike notice in March. But Canada's labor minister stepped in to prevent a strike, enacting legislation that sent the dispute to arbitration.
Later in March, some machinists engaged in wildcat strikes at airports in Toronto and Montreal, which disrupted dozens of Air Canada flights.
This is the second Air Canada agreement in days to be sent to final arbitration. On Saturday, the union representing 3,000 Air Canada pilots said that it had failed to reach a contract agreement with the company after 10 days of mediated talks, leaving the dispute in the hands of a government arbitrator.
Reporting By Nicole Mordant in Vancouver; Editing by Peter Galloway