January 24, 2011 / 2:41 PM / 7 years ago

CN Rail, union reach contract deal, avert strike

TORONTO (Reuters) - Canadian National Railway Co and the Canadian Auto Workers union have reached tentative agreements on labor contracts, they said on Monday, averting a strike at the country’s biggest railroad.

The union, which represents around 4,000 workers at CN, had said it would stop work at 12:01 a.m. Eastern time on Tuesday if settlements were not reached.

CN said the agreements, which still need to be ratified by union members, will provide “fair wage and benefit increases”.

They also contain provisions that will help CN retain and attract skilled employees, the railway said.

“We do not believe that CN would have had to make too many concessions given our belief was in a strong negotiating position based on recent agreements with its unions,” RBC Capital Markets analyst Walter Spracklin said.

Shares of CN, Canada’s biggest railway, rose on the Toronto Stock Exchange following news of the labor pacts, adding 68 Canadian cents, or 1 percent, to C$68.13.

Shares of Canadian Pacific Railway Ltd, where the CAW is also in labor talks, were also firmer, adding 25 Canadian cents to C$66.96.

“We also believe this (agreement with CN) is a positive read-through to CP, as we believe CP is then more likely to carve out a deal with its workers along similar lines to that of CN,” Spracklin said.

CP is Canada’s second biggest railway. Unionized workers at CP voted earlier this month to give their union a strike mandate in case labor talks fail. The strike deadline for 2,100 mechanical services workers is February 8.

CN said it would release details of the agreements with the CAW after ratification, which the union expects before the end of February.

The CAW represents nearly 4,000 workers at CN and a subsidiary, in four bargaining units -- mechanical, clerical/intermodal, excavator operators, and owner-operator truck drivers.

($1=$0.99 Canadian)

Reporting by Nicole Mordant and S. John Tilak

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