Air Canada reaches last-minute agreement with pilots union, averting strike

By Gnaneshwar Rajan

(Reuters) -Air Canada said early on Sunday it had reached a tentative agreement with its pilots union over a new four-year collective agreement, in a last-minute deal that will avert a near-term strike or lockout.

Before the tentative agreement was reached, Canada’s largest airline had been preparing to progressively cancel flights over three days and to completely shut down its operations as early as 12:01 a.m. EDT (0401 GMT) on Wednesday, Sept. 18.

Air Canada and Air Canada Rouge, which operate nearly 670 flights per day carrying about 110,000 passengers as well as freight, will now continue flying as normal, the airline said.

Air Canada said in a statement the terms of its new agreement with the Air Line Pilots Association (ALPA) representing more than 5,200 pilots will remain confidential, pending a ratification vote by its members expected to be completed over the next month.

The ALPA said in a separate statement that its leaders had approved the tentative agreement with Air Canada for member ratification.

The two sides have 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 such as United Airlines.

Labour Minister Steve MacKinnon said in a post on X that travel disruptions for Canadians were prevented thanks to the hard work of the parties and federal mediators.

Prime Minister Justin Trudeau said on Friday the Canadian government would not intervene to end the dispute like it did last month within 24 hours to end a strike at the two largest rail companies, Canadian Pacific (NYSE:CP) Kansas City and Canadian National Railway (TSX:CNR).

Air Canada had earlier offered a wage increase of more than 30%, as well as improved pension and health benefits. But the union said the proposal was not good enough for their members who have been working under pay rates and quality-of-life provisions negotiated in 2014.

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, the pilots’ association’s data shows. In 2013, the pay gap was just 3%.