BUSINESS

Cleared for takeoff

Air Canada reaches a deal with striking pilots

BRENDA BRANSWELL September 21 1998
BUSINESS

Cleared for takeoff

Air Canada reaches a deal with striking pilots

BRENDA BRANSWELL September 21 1998

Cleared for takeoff

Air Canada reaches a deal with striking pilots

BUSINESS

For a few moments, Jean-Marc Bélanger sounded more like a pitchman for Air Canada than the pilot who led his union in a strike against the airline. “We can take this airline a long way— it’s one of the best airlines in the world— by working with our management,” Bélanger told reporters Thursday night in a cramped room in a Montreal hotel. His buoyant mood came as Air Canada and the 2,100-member Air Canada Pilots Association, which Bélanger heads, thrashed out a tentative agreement to end the strike, which began on Sept. 1. After three days of almost round-the-clock negotiations that led to the deal, it was hard to tell who was happier: Bélanger, who called the agreement a fair one for pilots, or Priscille LeBlanc, the Air Canada spokeswoman. A beaming LeBlanc declared: “It is an agreement that allows Air Canada to continue to grow and most of all to remain competitive in a North American market.”

Pending approval by pilots over the weekend, all Air Canada jets should be airborne this week. Getting back in business, however, poses a number of logistical and administrative challenges for the airline, as well as some effort to regain the loyalty of its customers. Air Canada staff spent much of last weekend preparing its fleet—all grounded planes had to undergo two service checks— and calling back employees who were laid off during the strike. “It’s certainly a challenge for Air Canada employees to prepare 166 planes for the resumption of service,”

said Nicole Couture-Simard, an Air Canada spokeswoman.

The tentative deal coincided with a settle ment in another pilots strike at Northwest Airlines, based in Minneapolis, that grounded the U.S. line for 13 days. Under terms of the Air Canada settlement, the pilots agreed to a nine-per-cent wage hike over two years— an offer they had rejected before the strike began. They did, however, win concessions from the company that included improved training and fewer flight hours, which had been a key demand. The pilots, who earn an average of $100,000 a year, had initially asked for a 20-per-cent raise over two years before lowering the demand to 12 per cent.

Job security and safety issues were also in dispute.

Canadian Airlines clearly reaped some benefits from the strike that grounded its rival. The airline had added 20 flights a day during the strike to accommodate passengers grounded by Air Canada. Canadian will gain some financial benefit from the strike, said spokesman Jeff Angel, but with increased operational costs and overtime, the gains likely will not be significant. The more lucrative long-term benefit, he explained, would come from winning over Air Canada passengers, particularly business clients. “This was the

best opportunity that we’re probably ever going to have to highlight who we are as an airline and the service we can deliver,” he said. Canadian’s staff rose to the occasion. On the Labor Day weekend, of Canadian’s 16,000 employees, “not one of them phoned in sick,” Angel noted.

Air Canada, meanwhile, will have to do some fence-mending with its passengers. Last Friday, a crowd waited outside the airline’s busy ticket office in downtown Montreal waiting to change their travel arrangements. “It’s been a nightmare,” grumbled Anita Joseph, 39, who was in line for a refund. Joseph had to arrange for her niece to _ fly home to England on another airline be| cause of the strike. Air Canada staff tried to Ï ease the wait by passing out bottled water I and coffee to customers outside.

The strike has cost the airline, which carries about 60,000 passengers daily, an estimated $13 million a day. In the short term, analysts expect that the lost revenue will be reflected in significantly lower third-quarter results. Some also expect the company’s profits to be down in 1998 from last year’s net profit of $427 million. As for the salary hikes, “I think investors are hoping that the company will find savings in other areas,” said Jacques Kavafian, an analyst with HSBC Securities in Toronto. “We’re getting into an economic slowdown here. This is no time to begin raising costs.” Another analyst, who requested anonymity, says the shutdown would do “a little damage” to the airline’s balance sheet. But given Air Canada’s upcoming negotiations with its other unions, he said the strike was less dangerous than allowing the pilots to set an expensive pattern that other unions would follow.

Air Canada’s LeBlanc maintains that the airline “is satisfied” that its bargaining stance with other unions has not been jeopardized. The company is expected to start contract talks with three of its other unions over the next year. Negotiations with the airline’s 5,000 flight attendants, who earn an average $35,000 a year, begin next month. The Canadian Union of Public Employees, which represents Air Canada’s flight attendants, has not announced its demands for percentage increases, but, says union official Sylvie Lachance-Harrison, “We wouldn’t dream of getting anything less than what the pilots get. The way I see it there is always a deal to be reached. I can’t see that the company would again want to go through a strike.”

BRENDA BRANSWELL in Montreal