VANCOUVER, British Columbia (Reuters) - Members of Air Canada’s biggest labor union, who rejected a tentative contract agreement with the carrier last week, will vote again on the offer on July 14 after the two sides talked over the weekend, a union spokesman said on Monday.
Air Canada, the country’s biggest airline, said in a statement that it and the negotiating team from the International Association of Machinists and Aerospace Workers (IAMAW) had “agreed on the clarification of certain issues” in talks this past weekend. The two sides also agreed on a “prompt revote on the original agreements”.
The union’s negotiating committee and Air Canada reached a tentative 21-month agreement on June 8 on a new labor agreement, as well as a deal that will allow the cash-strapped airline to temporarily halt funding its C$2.9 billion ($2.5 billion) pension deficit.
But members of the 12,300-strong IAMAW narrowly rejected the agreements in a vote last week, a surprising outcome and a troubling one for the debt-laden airline.
Union support is critical for Air Canada to gain federal approval for a temporary freeze on pension funding and C$600 million in short-term loans.
Without a pension moratorium and the new financing, analysts say the carrier could be headed for its second bankruptcy filing in six years.
IAMAW spokesman Bill Trbovich said on Monday that union members across Canada will vote again on July 14, with results likely announced the same day.
The union said on its website that Air Canada, in a series of letters of intent and clarification, had at the weekend addressed member concerns on outsourcing, labor relations, pension matters and job stability at Aveos Fleet Performance, a sister company to Air Canada.
This is Air Canada’s final offer, the union said.
As a result, union members will also be asked to vote on a strike mandate to give their leaders the right to strike if the agreement is voted down.
“If we had a sustained strike at Air Canada it would have a significant material negative effect on the company to the point where filing for CCAA (bankruptcy protection under the Companies’ Creditor Arrangement Act) may have to be an eventuality,” said CIBC World Markets analyst Chris Murray.
Air Canada was not immediately available for comment.
The IAMAW represents technical, maintenance and operational support, clerical and finance employees at Air Canada.
Mechanics, particularly at Air Canada’s heavy maintenance operations in Montreal, are worried their jobs will be transferred to Aveos, which is based in El Salvador. Some IAMAW members of Air Canada have been seconded to Aveos until 2011 and are concerned about what will happen to their jobs when their contracts run out.
There are more than 11,000 technical, maintenance, and operational services workers in the bargaining unit, which voted 50.8 percent against Air Canada’s offer. Smaller clerical and finance units were strongly in favor of ratification. Voter turnout was low at less than 50 percent.
Two unions that represent customer service staff and dispatchers at Air Canada have already ratified 21-month agreements, while the unions representing flight attendants and pilots are expected to vote next week.
Air Canada’s B shares were unchanged at C$1.40 on the Toronto Stock Exchange on Monday afternoon. Its variable voting A shares were off 4 Canadian cents at C$1.39.
Additional reporting by Scott Anderson; editing by Peter Galloway