Air Canada is in the process of finalizing plans to suspend the majority of its operations, possibly starting as early as Sunday, as negotiations with the pilot union are approaching a deadlock due to "inflexible" wage demands, according to the country's largest airline, which made the announcement on Monday.
Air Canada and its low-cost subsidiary, Air Canada Rouge, currently manage nearly 670 flights daily. Unless a settlement is reached with the union, the suspension could impact 110,000 passengers daily, leading to significant disruptions. The airline's pilots are advocating for a reduction in the salary gap between themselves and their U.S. counterparts, who secured lucrative labor agreements in 2023 amid pilot shortages and robust travel demand.
"Air Canada remains hopeful that an agreement can still be reached with our pilot group, provided ALPA adjusts its wage demands, which significantly surpass average Canadian wage increases," stated CEO Michael Rousseau on Monday. The Air Line Pilots Association (ALPA), which represents over 5,200 pilots at Air Canada, has not yet responded to a request for comment from Reuters.
Discussions between the airline and the union are ongoing, but significant gaps remain between the two parties, the company further noted. "Our government strongly supports the collective bargaining process, and Canadians are relying on the parties to reach a deal," a statement from Canadian Labour Minister Steven MacKinnon's office read. ALPA's pilots have previously highlighted that the current pay rates at U.S. competitor Delta Air Lines are up to 45% higher than Air Canada's hourly rates.
"We understand the frustration of Air Canada's pilots, but it's important to recognize that the situation isn't entirely comparable due to the differing barriers to entry for pilots in the U.S.," commented TD Cowen analyst Thomas Fitzgerald in a note last week. The union and the airline entered a mandated three-week cooling-off period on August 27, during which the union is prohibited from striking. Air Canada estimates that it would take between seven to ten days for normal operations to resume once a complete shutdown is implemented.
The airline's shares have declined by more than 18% this year. The company is currently in discussions with other airlines to ensure stranded passengers are accommodated in the event of flight cancellations.
