September 19, 2011 / 7:59 PM / in 6 years

UPDATE 5-Canada sets back-to-work bill for Air Canada

* Flight attendants in legal strike position Wednesday

* Govt back-to-work bill could be introduced Wednesday

* Opposition has not decided whether to delay legislation (Recasts with minister’s comments)

By Allison Martell and Randall Palmer

TORONTO/OTTAWA, Sept 19 (Reuters) - The Canadian government said on Monday it would legislate Air Canada’s ACb.TO flight attendants back to work if last-ditch contract talks break down, citing concerns that a strike at the country’s largest airline would damage a still-fragile economy.

“We have put notice on the order paper today that we have the intention to introduce legislation should there be a work stoppage,” Labour Minister Lisa Raitt told reporters.

The earliest the government could introduce the legislation would be on Wednesday, Raitt said after a meeting in Ottawa with the two sides in the dispute.

She said the parties told her they were hopeful or reaching a settlement and averting a strike.

“They’re close enough to get a deal, they should be able to do it,” she said. “They told me they can come to a deal.”

In June, the Conservative government introduced back-to-work legislation to deal with striking Air Canada call-center and check-in staff, citing concerns about the strike’s impact on the economy. In the end, a deal was reached before the bill was passed.

Raitt said it could be several days before the new legislation is passed, in the event of a strike, because of the ability of the opposition to delay it.

The current dispute with the airline’s 6,800 flight attendants centers on pensions for new hires, wages and working conditions. The two sides have been talking for more than 24 hours to prevent a strike, which could start at one minute past midnight on Wednesday.

The airline says it would operate on a partial schedule if there is a strike, using code-share flights operated by partner airlines. [ID:nS1E78H081]

Flight attendants at Chorus Aviation’s CHRb.TO Jazz, which operates short-haul Air Canada Express-branded flights under contract, belong to a separate union.

Air Canada’s stock was down 1 percent at C$1.60, while shares of WestJet Airlines Ltd WJA.TO, Air Canada’s main domestic competitor, were flat at C$13.61. WestJet has said it would add extra flights if there is an Air Canada strike.

ARBITRATOR RULES ON PREVIOUS DISPUTE

In a possible clue to how one issue behind the flight attendants’ strike could be resolved, an arbitrator ruled this weekend on a final holdover from June’s strike, imposing a compromise where new staff will earn a pension that includes both defined-benefit and defined-contribution portions.

Air Canada flight attendants, represented by the Canadian Union of Public Employees, have rejected a tentative deal that would have sent the issue of pensions for new hires to arbitration.

Air Canada was pushed to the brink of bankruptcy two years ago, and it blamed heavy pension funding demands for its troubles. Its pension deficit is C$2.1 billion ($2.1 billion).

The airline argues that it faces higher costs than its rivals, in part because its roots as a state-owned corporation mean it is subject to Canada’s Official Languages Act and must be able to serve customers in either English or French.

Canada’s Commissioner of Official Languages said on Monday that Air Canada needs to improve its bilingual services and the airline pledged to develop a three-year action plan to improve its compliance with the law.

The pro-union New Democratic Party said it had not decided whether to delay passage of any new back-to-work legislation as it did in June with a government bill to force Canada Post workers back on the job.

The NDP is the largest opposition party in the House of Commons. It does not have the votes to block legislation, but it can delay a bill’s passage by several days. ($1=$0.99 Canadian) (Reporting by Allison Martell, Randall Palmer and Louise Egan; editing by Janet Guttsman and Rob Wilson)

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