April 15, 2011 / 4:29 PM / in 7 years

Air Canada pilots cancel vote on tentative deal

OTTAWA (Reuters) - Air Canada Inc’s main pilots’ union has canceled a vote set to begin on Friday on a tentative labor agreement with the country’s largest airline, after parts of the proposed deal proved “controversial” to pilots.

The Air Canada Pilots Association said its master executive council will meet April 19 to consider alternatives after its negotiating team held a series of membership meetings this week to explain the tentative agreement.

The association, which represents more than 3,000 pilots and had planned to conclude voting April 27, said it would not provide specific information on the contentious issues in the pact.

National Bank Financial analyst Cameron Doerksen said the deal proposed a 12 percent wage hike over four years and would put new hires in a defined contribution pension plan, versus the current defined benefit plan.

It also proposed the creation of a new low-cost leisure subsidiary, “crewed by lower cost employees”, Doerksen wrote in a note on Thursday, adding there was a reasonable likelihood the contract would be rejected.

PI Financial analyst Chris Murray said the scrapped vote is not overly worrisome, nor a harbinger for the carrier’s other labor talks.

“It’s certainly not a good situation ... but this is not the end of the process by far,” he said.

“Independent of the new contracts, and all the stuff around that, it’s business as usual: operations continue, the planes are going to fly, the customers are going to be served.”

The association council will now consider how best to address pilot concerns with the deal, said president Paul Strachan.

“I can say that this agreement touched on most of the existing articles of our current collective agreement, so ... broad changes contemplated in most areas of the collective agreement,” he said in an interview. “It’s quite a big bone to chew.”

Strachan said he was optimistic about working through the issues, adding it was a “pit stop, not a barrier.”

“There is a signed tentative agreement between the company and ACPA (Air Canada Pilots Association) which remains in force,” said Air Canada spokesmen Peter Fitzpatrick.

“We can’t comment how they may choose to proceed with the ratification process as this is an internal matter for ACPA.”

Air Canada faces five rounds of contract negotiations with its unionized staff, including pilots, sales agents, mechanics, dispatchers and flight attendants.

The Canadian Auto Workers union, which represents 3,800 customer service and sales agents, said last week that the carrier was demanding “significant concessions, including pension cuts” in negotiations.

The federal government recently appointed a conciliator to help those talks along after little progress had been made.

Air Canada’s shares were down 2.9 percent at C$2.34 on the Toronto Stock Exchange by Friday afternoon. They have dropped by more than a third this year, partly on worries that labor unrest could disrupt the airline’s fragile recovery.

Industry analysts have said they expect the unions will push for better wages and benefits due to Air Canada’s stronger financial position. They accepted status quo contracts 21 months ago to keep the carrier out of bankruptcy protection.

($1=$0.96 Canadian)

Reporting by Susan Taylor; editing by Jeffrey Hodgson

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