May 20, 2011 / 3:19 PM / 7 years ago

UPDATE 3-Air Canada service staff could strike in June

* Service, sales staff give mandate for June 13 strike

* Airline and union return bargaining table on Tuesday

* Air Canada says confident deal can be reached in time

* Shares little changed on TSX (Adds details, analyst comments)

TORONTO, May 20 (Reuters) - Air Canada’s ACb.TO 3,800 customer service and sales agents have authorized strike action on June 13 if necessary to back their bargaining position in contract talks with the airline, the union said on Friday.

The Canadian Auto Workers union, which represents service workers in airports and call centers at Canada’s No. 1 airline, said that 98.25 percent of those who voted were in favor of the strike mandate going into the peak summer season.

Air Canada is in talks with all five of its Canadian labor unions as all of its collective agreements expire this year.

Sticking points in negotiations with the CAW include concessions on benefits and pensions. Talks resume on Tuesday with a federally appointed mediator.

“Air Canada is holding a tough line,” said Robert Kokonis, managing director of airline consulting company AirTrav Inc. “There are high fuel prices, we’ve got economic uncertainty continuing to cloud the U.S. horizon, and ongoing instability in select markets like the Mideast and Japan.”

The airline said that it would maintain full operations and implement a contingency service in the event of a strike to minimize he impact on customers.

“Air Canada is however confident that there is sufficient time for the parties to reach an agreement before the CAW’s announced deadline,” it said in a statement.

The strike-mandate votes were held from May 13 to 19, with more that 80 percent of workers casting ballots, the union said.

The last labor contract between the two sides expired on Feb. 28.


On Thursday, the union that represents Air Canada’s 3,000 pilots said that a tentative labor agreement with the carrier had been rejected in a vote by its members, sending the Air Canada Pilots Association back to the bargaining table. [ID:nN19112126]

Issues for the pilots include wages, shifting new hires into a defined contribution pension plan, versus the current defined benefit plan, and the creation of a new low-cost leisure subsidiary, “crewed by lower cost employees”.

“Unless Air Canada can get the types of concessions it needs from its workforce, this low-cost carrier will not proceed,” Kokonis said.

Air Canada has been pushing for concessions from its workers for nearly a decade as it tries to trim costs to boost profitability in the cyclical and competitive industry.

The airline had a deficit of C$2.1 billion ($2.2 billion) for its defined benefit pension plans as of Jan. 1.

In 2009 Air Canada negotiated a special arrangement with its unions that relieved it from making contributions to the plans from April 1, 2009, to Dec. 31, 2010, and limiting its contributions between 2011 and 2013.

“In addition ... we have introduced to all of our union negotiation tables significant changes to our pension plan design to both reduce volatility and to reduce the deficit,” Michael Rousseau, Air Canada’s chief financial officer, said on Thursday at the Bank of America Merrill Lynch Global Transportation Conference.

Air Canada’s more heavily traded B shares were up 3 Canadian cent at C$2.37 on the Toronto Stock exchange on Friday afternoon.

$1=$0.97 Canadian Reporting by John McCrank; editing by Rob Wilson

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