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OTTAWA (Reuters) - Negotiators for Air Canada's biggest bargaining unit are meeting in Toronto on Thursday to review their options before holding talks with the cash-strapped airline on Friday to try to forge a contract that union members will accept.
A slim majority of the technical, maintenance, and operational services workers at Air Canada -- members of the International Association of Machinists and Aerospace Workers -- voted against a tentative 21-month deal that would have frozen wages and pension funding.
That rejection, by a narrow 50.8 percent, could jeopardize the airline's plans to gain federal approval for a temporary freeze on pension funding and win C$600 million ($517 million) in loans.
Analysts say that fresh financing and a pension funding respite are critical to help the debt-laden airline avoid a second bankruptcy filing in six years.
Air Canada has been hard hit by a sharp decline in global travel due to the recession, as well as by tough domestic competition.
A group of 22 bargaining staff with the union is meeting in Toronto on Thursday to determine how best to proceed, an IAMAW spokesman said.
"We've got to go back to the table and see if we can get a deal that everybody can live with," said the union's communications director, Bill Trbovich.
"We're trying to explain to our people that this is very serious: if you want the company to stay out of (bankruptcy) then it has to be this agreement."
There are more than 11,000 technical, maintenance, and operational services workers in the union, which has 12,300 members in total at the airline. Smaller finance and clerical bargaining units were strongly in favor of ratifying the agreement in votes held over the past week.
"The biggest group ... said no by point-eight percent, a very, very narrow margin," Trbovich said. "Now does this mean we may have another vote without any tweaking of the agreement? I don't know. That's something that may come out of the meeting today."
Trbovich did not know if federally appointed mediator James Farley would take part in talks between the union and the company.
Air Canada was not immediately available for comment.
Ottawa appointed Farley, a former judge, in early June to help settle disagreements between the airline and its unions over the future of Air Canada's C$2.9 billion pension plan.
Two unions, representing customer service staff and dispatchers, have already ratified agreements with the airline. Two other unions, representing flight attendants and pilots, are expected to conclude voting this month.
Air Canada's class A shares were unchanged at C$1.41 on the Toronto Stock Exchange at midday on Thursday.
Reporting by Susan Taylor; editing by Rob Wilson