Air Canada Passenger Service to Be Propped by Government Bill Amid Strike

Air Canada (AC/A) passengers facing flight delays amid a strike by service workers will get a boost from a government bill aimed at ensuring airline service, Canadian Labor Minister Lisa Raitt said.

“We will put on notice tonight legislation to ensure continuing air service for passengers,” Raitt said in response to a question in the House of Commons today.

Air Canada service workers went on strike at midnight after contract negotiations between the union that represents 3,800 call-center, check-in and gate staff and management failed to reach an agreement. The airline is deploying more than 1,700 managers to help ensure services and has advised passengers to arrive early and expect delays.

“This is a matter of significant economic consequence,” Finance Minister Jim Flaherty said in Ottawa today. “It affects tourists of course, but it affects the business, it affects the delivery of cargo in Canada and from Canada abroad. Air Canada has a huge section of the market in Canada.”

Talks with the Canadian Auto Workers over a new contract and pension changes broke down after passing a midnight deadline set by the union. The carrier plunged the most in more than a year yesterday in Toronto trading ahead of the walkout.

“We are very disappointed that an agreement for a new contract has not been reached,” Chief Operating Officer Duncan Dee said in a statement after talks broke down. “We remain ready to resume discussions at any time to achieve a negotiated settlement.”

‘Ready’ to Negotiate

There have been no cancellations to Air Canada flights today because of the strike, said Angela Mah, a spokeswoman at the Dorval, Quebec-based carrier. The airline is “ready” to return to negotiations with the union, she said.

The airline controls 51 percent of the nation’s domestic market by capacity, according to the Centre for Asia Pacific Aviation, a Sydney-based market-research firm.

Air Canada and the union have disagreed over the company’s proposal to switch from a defined-benefit pension, which guarantees a specific amount of benefits, to a defined- contribution plan for new hires.

“This strike is unfortunate -- not only for our members, but also for Air Canada passengers,” CAW President Ken Lewenza said in a statement last night.

Air Canada Class B shares rose 10 cents to C$1.89 at 4:05 p.m. in trading on the Toronto Stock Exchange. Shares of Calgary-based WestJet Airlines Ltd. (WJA), Canada’s second-largest airline, climbed 3 cents, or 0.2 percent, to C$14.22.

Flight Delays

Toronto Pearson International Airport, the country’s busiest airport, has listed more than 50 flight delays and seven cancellations of Air Canada flights on its website, up from about a dozen delays listed earlier today. CP24 television has reported “minor delays” at Pearson.

At Vancouver International Airport, more than 10 flights were delayed to destinations including Hong Kong, Toronto and Victoria, according to the airport’s website.

The carrier dropped 7.7 percent to C$1.79 yesterday, the biggest decline since May 2010. It has fallen 32 percent since its last contract with the CAW expired Feb. 28.

Air Canada’s more than 10,000 baggage handlers and mechanics, 6,800 flight attendants and 3,000 pilots also have been without a contract since March 31, according to Chris Hiscock, president of International Association of Machinists and Aerospace Workers’ Canadian Airways Lodge 764. Members of the Air Canada Pilots Association voted last month to reject a tentative agreement with the airline.

Porter Airlines, a Toronto-based commuter carrier that flies out of the city’s Billy Bishop Toronto City Airport, has seen a “noticeable increase in bookings” over the past 24 hours across all of its destinations, said Brad Cicero, a company spokesman.

To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net Sean B. Pasternak in Toronto at spasternak@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net.

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