September 20, 2011 / 1:22 PM / in 6 years

UPDATE 6-Air Canada union optimistic members will back deal

* Deal reached just hours before strike due to start

* Union members must still ratify agreement

* Air Canada stock rises as much as 7 percent (Recasts with comments from union press conference)

By Nicole Mordant and Randall Palmer

Sept 20 (Reuters) - The union representing Air Canada ACa.TO ACb.TO flight attendants was optimistic on Tuesday that its members would support a last-minute labor deal hammered out with the country's biggest airline.

The tentative contract agreement was reached between Air Canada and the Canadian Union of Public Employees (CUPE) on Tuesday afternoon, less than nine hours before the start of a strike by about 6,800 flight attendants, which would have grounded much of the airline's fleet.

The agreement must still be ratified by union members, who rejected a previous deal with Air Canada last month.

"We are pretty confident that we have a good deal," said Jeff Taylor, president of CUPE's Air Canada component.

The union got "pretty much everything they were asking us to bring them," Taylor said at a press conference in Montreal. He declined to give any details of what was in the agreement.

Air Canada's B shares jumped more than 7 percent on the Toronto Stock Exchange after the announcement of a deal, closing at C$1.70.

Details of the new contract agreement will be made public only after it has been ratified by workers, Air Canada and CUPE said.

It will take seven days to notify members of the new agreement plus another 10 for members to hold a ratification vote, Taylor said, meaning the acceptance or rejection of the contract will be known around Oct. 7.

Flight attendants at Canada's biggest airline would have been in a legal position to strike starting at one minute past midnight on Wednesday.

A strike could have stranded as many as 65,000 passengers on its first day, Labour Minister Lisa Raitt said earlier on Tuesday. The government had planned legislation to force striking workers back to work. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Government taking tough line with unions: [ID:nS1E78J1OB] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

"It's business as usual and customers can continue to make their travel plans on Air Canada with confidence," said Susan Welscheid, the airline's senior vice-president of customer service.

Flights of Air Canada Express that are operated by Chorus Aviation's CHRb.TO Jazz will experience some disruption on Wednesday after Air Canada started canceling some domestic flights on quieter routes to shift aircraft onto busier travel destinations if a strike took place. Air Canada Express will be back to its normal schedule on Thursday, Air Canada said.

Raitt had urged the two sides to reach an agreement and said on Monday the government would swiftly legislate flight attendants back to work if a strike began, citing concerns of damage to a still-fragile economy.

"I think it was pretty clear that if there was going to be a strike it was not going to be one that was going to last too long. But even a couple days of disruption could potentially be hurtful from an earnings point of view for Air Canada," National Bank Financial analyst Cameron Doerksen said.

The new labor pact was hammered out after marathon talks that began on Aug. 31, with the assistance of two mediators from the federal Labour Ministry. Flight attendants had been without a contract since March 31, 2011.

The contract dispute had centered on pensions for new hires, wages and working conditions.

Had attendants walked off the job, it would have been the second strike to hit Air Canada this year after a three-day work stoppage by sales and ticketing agents in June. The government had been drafting back-to-work legislation when the two sides reached an agreement.

Air Canada still needs to reach agreements with three of its other unions -- pilots, maintenance workers and dispatchers -- whose contracts have also expired.

$1=$0.99 Canadian Additional reporting by Allison Martell in Toronto; editing by Janet Guttsman and Rob Wilson

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