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Air Canada reaches pact with all but one union

By TERRY WEBER and KEITH McARTHUR

Globe and Mail Update

Air Canada said Wednesday it has reached crucial cost-cutting agreements with all of its unions with the exception of the Air Canada Pilots Association.

That union is now considering the company's latest proposal, the carrier said.

Late Tuesday, Air Canada said it had struck deals with unions representing its technical and ground service workers, flight attendants and flight dispatchers.

"The cost reductions in the agreements reached to date were primarily obtained through productivity improvements including work force reduction and wage rollbacks," Air Canada said in statement.

"The agreements are subject to ratification by union membership. The company has agreed that pension benefits will be unaffected."

Further details of the agreements were not released, although the Globe and Mail has learned that the deal reached with the Canadian Union of Public Employees -- representing the airline's flight attendants -- includes 1,963 layoffs, plus another 413 members who are already off the job.

CUPE's Air Canada component represents about 8,300 flight attendants.

"This has been an extremely difficult process for everyone involved," CUPE's Pamela Sachs said in a statement. "But we feel we have done the best job possible with the company potentially facing liquidation."

The Canadian Air Line Dispatchers Association pact, meanwhile, involves a 2.5-per-cent pay cut and a significant reduction in employment, percentage wise. The total number of dispatchers will go to 66 from 102 as Air Canada closes its Calgary base.

Montreal-based Air Canada has been operating under bankruptcy protection since April 1 and is trying to slash $770-million from its $3-billion a year labour costs.

On Tuesday, the carrier struck a crucial new deal with its largest union, the International Association of Machinists and Aerospace Workers, that will save the insolvent airline $180-million a year.

The IAM said 1,399 workers will lose their jobs, and the wages of those that remain will be reduced 1.5 per cent for three years.

Earlier in the week, the carrier struck reached agreements with the Canadian Auto Workers Union -- which will save it $150-million -- as well as four unions representing workers at its Air Canada Jazz regional carrier, representing cost cuts of $110-million a year.

The airline expects to save another $100-million a year through management layoffs and pay cuts.

Justice Warren Winkler, who was appointed to facilitate Air Canada's labour cost cutting under the Companies' Creditors Arrangement Act, had set a deadline for talks of 5 p.m. EDT on Tuesday, although that timeframe was later extended.