Canadian government moves to end Air Canada strike

MONTREAL, Aug 16 (Reuters) – The Canadian government on Saturday moved to end a strike by Air Canada’s cabin crews and require binding arbitration to resolve their contract impasse, an action that the country’s largest carrier had sought but unionised flight attendants opposed.

Thousands of Air Canada flight attendants walked off the job after months of negotiations over a new contract just before 1 a.m. EDT (0500 GMT). In anticipation of the stoppage, the airline cancelled nearly all of its 700 daily flights, forcing more than 100,000 travellers to scramble for alternatives or stay put.

Jobs Minister Patty Hajdu said at a news conference she had asked the Canada Industrial Relations Board to impose binding arbitration on both sides and order an immediate end to the strike.

“This is not a decision that I’ve taken lightly, but the potential for immediate negative impact on Canadians and our economy is simply too great,” she said.

Air Canada had asked Prime Minister Mark Carney’s minority Liberal government to act, but the Canadian Union of Public Employees said it wanted a negotiated solution, as binding arbitration would take pressure off the airline.

Minutes after the announcement, CUPE blasted the government’s decision.

“The Liberal government is rewarding Air Canada’s refusal to negotiate fairly by giving them exactly what they wanted,” it said in a statement posted on X. Air Canada did not immediately respond to a request for comment.

While passengers have generally voiced support for the flight attendants on social media, Canadian businesses – already reeling from a trade dispute with the U.S. – have urged the federal government to impose binding arbitration and cut short the strike.

“With both parties declaring an impasse in negotiations, with valuable cargo grounded and passengers stranded, the government made the right decision to refer the two sides to binding arbitration,” Matthew Holmes, chief of public policy for the Canadian Chamber of Commerce, said in a statement.

Air Canada indicated it would take four to five days to resume full operations, Hajdu said, assuming the board granted the government’s request, which it usually does.

The carrier had offered a 38% increase in total compensation for flight attendants over four years, with a 25% raise in the first year, which CUPE said was insufficient.

But the most contentious issue has been the union’s demand for compensation for time spent on the ground between flights and when helping passengers board. Attendants are currently paid only when their plane is moving.

The union has said Air Canada offered to compensate flight attendants for some work that is now unpaid at 50% of their hourly rate.

A source close to the negotiations told Reuters the union was looking for parity on wages with Canadian leisure carrier Air Transat. Its flight attendants approved a contract last year that provided for total compounded increases of 30% over five years, making them the highest paid in the industry in Canada.

Air Canada did not confirm if such a proposal had been put forth by the union.

Wesley Lesosky, president of the Air Canada component of CUPE, said in a press conference in Toronto earlier on Saturday that there were no bargaining sessions scheduled between the two sides, which have held on-and-off negotiations for months.

Earlier in the day outside Toronto Pearson International Airport – the country’s busiest – hundreds of cabin crew waved flags, banners and picket signs. Union officials called on members to assemble outside all of the country’s major airports, including in Toronto, Montreal, Calgary and Vancouver.

Montreal-based Air Canada had said the suspended flights included those operated by its budget arm, Air Canada Rouge. The stoppage would affect about 130,000 customers a day, the carrier said in a statement. Flights by Air Canada’s regional affiliates – Air Canada Jazz and PAL Airlines – were operating as usual.

Hajdu told reporters she had also asked the country’s industrial relations board to extend the terms of the existing collective agreement until a new one is determined by the arbitrator.

The minister said the government preferred negotiated settlements to labour disputes, but the current impasse showed the two sides would not find a solution soon enough to spare the economy further damage.

She said Canada had already experienced “unprecedented attacks on trade”, referring to tariffs imposed by the Trump administration on U.S.-bound shipments.

The Canada Labour Code gives the government the right to ask the industrial relations board to impose binding arbitration in the interests of protecting the economy.

Under Justin Trudeau, Carney’s predecessor, the government intervened quickly last year to head off rail and dock strikes that threatened to cripple the economy.