Air Canada’s pilots, flight attendants approve new deal to avoid bankruptcy

Pilots with Air Canada (TSX:AC.B) have approved a new labour agreement by a thin margin that’s part of the money-losing airline’s efforts to reduce its costs and avoid having to seek bankruptcy protection.

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MONTREAL — Pilots with Air Canada (TSX:AC.B) have approved a new labour agreement by a thin margin that’s part of the money-losing airline’s efforts to reduce its costs and avoid having to seek bankruptcy protection.

The pilots union said Monday that 55 per cent of the votes cast were in favour of the tentative agreement reached June 15 with the help of a federal mediator.

“What that tells us is that we did our homework, they do understand the issue and they wanted to send a message that we’re not all behind this, said Capt. Serge Beaulieu, head of the Air Canada Pilots Association.”

“Basically the message is this one is not a free ride. The company will be on a probationary period,” Beaulieu said.

Beaulieu said there’s lots of work left to do to make sure Air Canada remains viable and avoids going under bankruptcy protection again, as it did for 18 months ending in September 2004.

“We are cautiously optimistic it’s going to work, Beaulieu said from Toronto. ”

“It’s a better deal than had we kept the old collective agreement, Beaulieu said. ”We prefer to see the glass as half full.“ ”

The company’s flight attendants also ratified their agreement on the weekend, passing it with 65 per cent of the votes in favour of the deal.

“The flight attendants have done their part, so now it’s up to the airline to do its part,” said Katherine Thompson, president of the Air Canada component of the Canadian Union of Public Employees.

The tentative agreements between Air Canada and its unions call for a 21-month extension of their current contracts, which would freeze wages, pensions and benefits at their current levels.

But Air Canada’s efforts to avoid bankruptcy protection may be in the hands of thousands of repair crews and baggage handlers with the International Association of Machinists and Aerospace Workers. They vote again on the deal on Tuesday.

Results of the union’s second vote — the original vote narrowly rejected the deal — are expected to be announced on Wednesday, said union spokesman Bill Trbovich.

Air Canada resubmitted the offer after meeting with union negotiators and clarifying the outsourcing of work to Aveos, a private repair and overhaul company spun off by the company’s parent.

Some Air Canada machinists are seconded to Aveos to overhaul narrow-body aircraft. Others who work on widebody planes have an agreement to do such work in-house at the airline until 2011.

Mechanics fear aircraft maintenance work will be transferred from Canada to Aveos facilities in El Salvador if the private company builds a hangar in the Central American country. The company says it has no plans to transfer the work.

Under the various labour agreements, Air Canada’s unions will share a 15 per cent equity stake in the airline and obtain one seat on its board of directors.

In exchange, Air Canada gets a union support for moratorium on making contributions towards its pension deficits. The company also requires government approval.

About 85 per cent of Air Canada’s eligible pilots voted on the offer, which is part of the airline’s efforts to reduce its costs and eliminate its losses.