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Air Canada ( ACDVF ) pilots demand pay close to U.S. carriers

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Labour minister says extreme economic impact forced his

hand at

railroads

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Airline says travelers reluctant to pay higher fares

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By Allison Lampert, David Ljunggren and Rajesh Kumar Singh

Aug 30 (Reuters) - Canada is reluctant to force Air

Canada's ( ACDVF ) pilots back to work if they go on strike, a government

source told Reuters this week, even though Ottawa took that step

to end a work stoppage at the country's two railroads earlier

this month.

Air Canada's ( ACDVF ) estimated 5,400 pilots, who want the

airline to offer pay close to the wages earned by their U.S.

peers, said on Friday they would strike if necessary as early as

Sept. 18

Their 10-year contract expired nearly a year ago, and no

negotiations are scheduled, the pilots said. If a strike drags

on, the inconvenience to travelers and the economic damage would

compound.

The Air Line Pilots Association, which represents the Air

Canada ( ACDVF ) pilots as well as those at most U.S. airlines, said it

fears federal intervention as happened at the country's two main

freight railways. The government source said Ottawa is committed

to collective bargaining and would not be trigger happy when it

comes to using its power to end labor disputes.

Labour Minister Steven MacKinnon, who ordered an end to

the rail dispute, told union workers on Wednesday his hand had

been forced by the extreme economic impact of the rail

stoppages. The Teamsters union is challenging the decision in

court.

"We found ourselves in exceptional circumstances," he said.

The two rail companies held an effective duopoly. Air Canada ( ACDVF )

controls about 44% of domestic air travel seat capacity with the

remainder divided among at least three other carriers.

Reluctance to intervene at Air Canada ( ACDVF ) could also reflect

political considerations. Prime Minister Justin Trudeau's

minority Liberal government depends on support from the

pro-union New Democratic Party in parliament. The Liberals also

want to win union votes ahead of an election due by end-October

2025.

WAGE GAP

Air Canada ( ACDVF ) pilots have demanded wages closer to counterparts

at carriers like United Airlines and Delta

although neither the Canadian airline nor its pilots have

disclosed specific pay proposals.

United's pilot contract ratified in September 2023 raised

pay about 42% and is estimated to cost the Chicago-based airline

more than $10 billion over four years.

Pilots at other U.S. airlines also negotiated hefty pay

raises in the past two years amid a travel boom and shortage of

aviators. But demand for flights has softened, and earnings are

under pressure.

Air Canada ( ACDVF ), where senior captain salaries of up to C$350,000

($259,567) a year have been advertised, said on Thursday it

intends to reach a deal that recognizes pilots' contributions

but "also takes into consideration travelers' increasing

reluctance to pay higher airfares."

The Montreal-based airline's earnings are already weakening.

It has slashed its full-year earnings estimates by 18%. Raymond

James analysts estimated a 5% increase in pilot wages will

increase Air Canada's ( ACDVF ) costs by C$70 million.

Air Canada's ( ACDVF ) pilots have said they received annual wage

increases of about 2% under their old contract after

back-to-work legislation averted a stoppage in 2012.

A Reuters comparison of wages under United's latest contract

and Air Canada's ( ACDVF ) expired contract, which remains in place for

now, showed United pilots earned higher hourly pay at all

levels. But the disparity was greater among junior aviators.

For example, a third-year first officer at United flying the

A320 narrow-body airliner earns $196.03 per hour, compared with

C$81.02 an hour at Air Canada ( ACDVF ).

"Air Canada ( ACDVF ) has been enjoying a discount on our pilot

labor," said airline union President Charlene Hudy.

Strikes in commercial aviation are rare in North America,

but effective. A dispute between Canada's WestJet Airlines and

its mechanics was resolved in one day, after their union this

summer vowed to strike until they reached a deal following

government efforts to order binding arbitration.

($1 = 1.3484 Canadian dollars)