Air Canada set to resume talks with pilots, machinists

MONTREAL — Air Canada could be on the runway to finally securing labour peace as the carrier awaits the federal appointment of arbitrators to resume negotiations with two of its largest employee groups.

MONTREAL — Air Canada could be on the runway to finally securing labour peace as the carrier awaits the federal appointment of arbitrators to resume negotiations with two of its largest employee groups.

The Montreal-based airline said Friday that 10 days of scheduled talks will begin with the union that represents its 8,600 mechanics, baggage handlers and cargo agents.

That comes a week after it unveiled similar plans with its 3,000 pilots.

However, talks can’t begin until Labour Minister Lisa Raitt appoints arbitrators. Her office said the appointments could be made within days.

The country’s largest airline and the two labour unions have said they wouldn’t provide “further comments during the course of these negotiations.”

The ground workers were thwarted from going on strike last month, and Air Canada (TSX:AC.B) was prevented from locking out the pilots, when Raitt sent the matter to the Canada Industrial Relations Board.

The federal government later passed back-to-work legislation that sent the company and the two unions to binding arbitration, although Raitt said repeatedly it would be better for the parties to reach a negotiated agreement.

Industry observers say the resumption of talks was expected because neither side wants to put their fate in the hands of arbitrators in a final-offer selection process.

“This is just one more step in this extremely painful process,” said David Tyreman of Canaccord Genuity.

Despite unique issues such as the launch of a low-cost carrier, he said the pattern for labour deals was set last year with customer service agents and flight attendants.

Under that precedent, wages would increase about two to three per cent annually while a hybrid pension system would be implemented.

“The reality is there’s simply no more money at Air Canada for more than that anyway,” he said.

Still, the company surprised analysts late Thursday by disclosing its first-quarter adjusted earnings would range between $170 million and $180 million. That’s more than $100 million higher than some analysts had forecast.

Even though the guidance is positive, the carrier is expected to still lose money in the quarter — 91 cents per share on $2.9 billion of revenues, according to a survey of eight analysts by Thomson Reuters.

That compares with a loss of 45 cents per share on $2.75 billion of revenues in the prior-year period.

Tyreman believes higher revenues through increased fares and ancillary fees are offsetting increased fuel costs since other metrics such as capacity, costs and load factor are consistent with the airline’s prior forecasts.

The results are also consistent with what U.S. carriers have recently reported.

“This is a lot faster and more complete than I expected…and that’s a good sign because the industry seems to be reacting a lot faster now to shocks like fuel prices, which is good for industry profitability.”

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