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Air Canada strike looms
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July 6, 1999: 7:50 p.m. ET
Country's biggest airline canceling flights as negotiations continue
By Staff Writer M. Corey Goldman
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NEW YORK (CNNfn) - Tens of thousands of travelers could be subject to a little turbulence as early as Thursday as Air Canada International, the country's biggest airline, attempts to head off a potential strike by 5,000 flight attendants.
Negotiators for the airline division of the Canadian Union of Public Employees (CUPE) and Air Canada (ACNAF) were holed up at a downtown Ottawa hotel late Tuesday trying to reach an agreement that would allow the airline to continue its passenger and cargo service both within and outside the country.
In the evening hours Tuesday negotiations appeared to be progressing, though neither side had reached any kind of definitive agreement, according to CUPE spokeswoman Catherine Louli.
At issue are retirement benefits for the airline's flight attendants, who are asking for additional retirement compensation alongside their regular packages.
"The company has finally recognized the issue that they have to address, which is income retirement," Louli said. "It's unfortunate it took us into the final 48 hours after 10 months of talks, but they have recognized it and are currently negotiating it."
Air Canada has already offered the attendants a one-time retirement allowance of up to C$12,383 (US$8,420.44), which was overwhelmingly rejected; almost 90 percent of the voting members turned down the airline's latest offer.
Few alternatives
An Air Canada strike would send the 60,000 passengers it services daily scrambling to find alternative arrangements on other carriers, including arch-rival Canadian Airlines.
"We have today returned to the bargaining table with a renewed focus on achieving fair and reasonable negotiated settlement that would avoid any service disruption to our customers," said Air Canada president Robert Milton.
Calgary, Alberta-based Canadian said it will add some flights to the popular Montreal-Ottawa-Toronto triangle to accommodate the extra passengers if a strike occurs and will put additional planes on some of its longer-distance and international routes.
Still, it pointed out that most of its flights are already at or near 100 percent capacity, leaving little space for extra travelers, according to Canadian spokeswoman Renée Smith-Valade.
"Canadian will offer a limited number of flights where demand is highest and schedules permit in the event of a work stoppage," she said.
So far, the looming strike hasn't undermined investor confidence in the company's stock. Its shares fell a paltry 1/16 to 3-9/16 on the Nasdaq stock exchange Tuesday and rose C$0.10 to $6.30 on the Toronto Stock Exchange. Air Canada's shares traded around the $7.90-mark last September when the pilot's strike ended.
Still, a prolonged strike could cause loyalties to shift during flight, so to speak, among both Air Canada investors and customers.
Air Canada flight attendants have struck twice in recent years, both times for extended periods.
In 1985, striking flight attendants shut down Air Canada for seven weeks in a dispute about wages. And in 1997, the attendants disrupted flights on Air Ontario, Air Canada's regional operation, for 11 weeks causing thousands of passengers in the northeastern U.S. and central Canada to look for alternative arrangements.
No replacement workers
The airline hired replacement workers at the time, but they were so poorly trained that many pilots refused to fly with them.
While negotiations continue in Ottawa, Air Canada is already canceling some of its flights and reducing the number of new bookings it takes to prepare for the strike, which could come as early as 12:01 a.m. Thursday.
The Montreal-based airline is powering down its operations to avoid the chaos and expense of being left with 5,000 fewer staff Thursday morning, a lesson it learned from a crippling 13-day strike by its 2,100 pilots almost a year ago. That strike cost the airline C$250 million in operating losses in 1998.
And it's more than just the lack of in-flight hospitality that will ground domestic and international flights, according to a CUPE spokeswoman. Because of federal regulations recently unveiled to better train Canadian flight attendants, it would be "impossible" to train enough attendants to replace those on strike, she said.
"The airline is making no attempt to scab," the spokeswoman said, adding that the pilots have been supportive of the attendants' claims.
All of Air Canada's smaller partners, including Air Ontario, Air Nova, Air Alliance and AirBC, will continue to offer local services between major cities throughout the country. Air Ontario, which offers popular business commuter flights between Toronto, Ottawa and Montreal will continue to offer those services regardless of whether a strike develops, spokesperson's for those airlines said.
Ongoing negotiations
Other Air Canada partners, including United Airlines, Lufthansa, SAS, Air New Zealand, EVA Air and Royal Jordanian Airlines will continue to operate their regular routes in the event of a strike. Connections to those flights involving Air Canada's fleet, however, will not take place, CUPE said.
Negotiations between the airline and the union representing its flight attendants have been ongoing since last October. The carrier is facing constraints, though. It set itself an ambitious target of cutting its expenses by an annual $250 million after it posted a loss of $16 million last year.
Wages, which were also part of the negotiations, have already been agreed on between the two sides, with attendants receiving annual increases of 5 percent, 4 percent and 3 percent. The number of concessions the union was trying to negotiate with the airline has been reduced to nine from 20.
For its second quarter, Air Canada is expected to earn C$0.29 a share, according to analysts polled by First Call Corp. The airline is expected to earn C$0.53 a share in the third quarter. In the first quarter, the airline posted net income of C$3 million, or C$0.02 a share.
And the bargaining table isn't going to be folded up just yet, even if a strike with its flight attendants is averted. Talks with the 8,500-member International Association of Machinists and Aerospace Workers, its biggest union, have broken down and are currently in the conciliation phase.
Air Canada has set up an 800 number for ticket holders to call for flight information and other arrangements and has put a special section on its website to alert passengers of developments. The recorded message can be heard by dialing 1-800-725-0722. 
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