Air Canada averts strike with last-minute pilots union deal

After preparing to cancel flights and shut down its operation, Air Canada will operate normally after it struck a tentative agreement with its pilot union, avoiding a  strike or lockout, the union said on Sunday.
Canada Air (AC.TO) reached a tentative, last-minute deal with its pilots’ union, the Air Line Pilots Association, ALPA, over a new four-year collective agreement, ending the stand-off over pay and benefits that started in May 2023.
“While it has been an exceptionally long road to this agreement, the consistent engagement and unified determination of our pilots have been the catalyst for achieving this contract,” said First Officer Charlene Hudy, chair of the Air Canada ALPA Master Executive Council, MEC, in a statement.
Canada Air, the country’s largest airline, prepared to cancel flights progressively over three days and then completely shut down its operations as early as Sept. 18.
“The new agreement recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline,” the carrier said in a statement.
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As of Sunday, flights will run as usual. Air Canada and Air Canada Rouge operate nearly 670 flights per day, carrying about 110,000 daily passengers, as well as freight.
Air Canada said the terms of its new agreement with the Air Line Pilots Association (ALPA), representing over 5,400 Air Canada pilots, will remain confidential, pending a ratification vote by members expected to be completed over the next month.
“Ratification requires approval by a majority of the voting membership, who will soon receive the Tentative Agreement for review,” said the union in a statement.
The deal, however, would “put an end to our outdated and stale decade-old, ten-year framework,” said Hudy.
The ALPA said the deal would mean an additional $1.4 billion in value for members over its four-year term, representing a 46% increase over the previous contract that expired nearly a year ago on Sept. 29, 2023.
If approved by ALPA members, the deal would be backdated to run from Sept. 30, 2023 to Sept. 29, 2027.
The two sides had been negotiating a new contract for the past 15 months, with the pilots demanding wage rates that would narrow the pay gap with their counterparts at major U.S. carriers, like United Airlines (UAL.O).
“We have initiated discussions with Air Canada to achieve a contract that closes the growing gaps in wages and quality of life between pilots in the United States and Canada,” stated a letter from the union.
Air Canada had offered a wage increase of more than 30%, as well as improved pension and health benefits. However, the union said the proposal was not good enough for their members working under pay rates and quality-of-life provisions negotiated in 2014.
“Air Canada pilots are working under a contract that was negotiated a decade ago, which means our pay rates and quality-of-life provisions are effectively frozen in time,” according to the union’s website. “Since that time, Air Canada has grown significantly, making billions in profit, and Air Canada’s top corporate executives have seen their salaries double.”
Pilots at U.S. airlines have negotiated hefty pay raises in new contracts in the past two years amid a travel boom and staffing shortages. United’s new pilot contract, for example, included pay increases of about 42%.
As a result, some United pilots now earn 92% more than their counterparts at Air Canada, data from the pilots’ association shows. In 2013, the pay gap was just 3%.
Prime Minister Justin Trudeau said on Friday the Canadian government would not intervene to end the dispute as it did last month within 24 hours to end a strike at the nation’s two largest rail companies, Canadian Pacific Kansas City (CP.TO) and Canadian National Railway (CNR.TO).
Canadian Labour Minister Steven MacKinnon, in a post on X, saluted the efforts of Air Canada and its pilots who he said had shown resolve to get a deal and prevent travel disruptions.
“Negotiated agreements are always the best way forward and yield positive results for companies and workers,” he said.