Air Canada has offered its pilots 42 per cent pay raise over four years to avoid potential strike

The deal, reached shortly after midnight on Sunday, is a four-year collective agreement that prevents a major shutdown of Canada’s largest airline that would’ve officially began on Wednesday, affecting more than 100,000 passengers who fly on the airline every day — before the deal was announced both sides were in a position to provide a 72-hour strike or lockout notice on Sunday, which would have disrupted the 670 daily flights on average operated by Air Canada and Air Canada Rouge.

The airline said Air Canada and Air Canada Rouge flights will operate as normal during the ratification vote. 

Air Canada said the terms of the new deal will remain confidential pending the vote, which is expected to be completed over the next month, and approval by the airline’s board of directors.

The Air Line Pilots Association (ALPA), the union representing 5,200 of its pilots, said the agreement, if ratified, will generate approximately an additional $1.9 billion for Air Canada pilots over the course of the deal, which requires majority of voters to approve. 

An executive summary of the tentative deal was posted on the strike site created by the union Sunday, revealing that the airline’s pilots will receive a four-year cumulative pay rate increase of approximately 41.7 per cent, if the deal is ratified. 

Employee pay rates will see an average 26 per cent increase in the first year of the deal, retroactive to Sept. 30, 2023. The deal then calls for a four per cent raise for workers on Sept. 30 each year until 2026.

“The new agreement recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline,” Air Canada said in their statement. 

The airline said customers who used its labour disruption goodwill plan to reschedule their flights originally booked between Sunday and Sept. 23 to another date before Nov. 30 can return to their original flight in the same cabin at no cost, providing there is space available. 

“While it has been an exceptionally long road to this agreement, the consistent engagement and unified determination of our pilots have been the catalyst for achieving this contract,” said first officer Charlene Hudy, chair of the Air Canada Master Executive Council (MEC) at the ALPA. “This agreement, if ratified by the pilot group, would officially put an end to our outdated and stale decade-old, ten-year framework.”

Business groups are also “relieved” at the tentative agreement, as a strike or lockout would have impacted the flow of goods transported by airplane.

“We are relieved that Air Canada has reached a tentative agreement with the Air Line Pilots Association,” Candace Laing, president and CEO of the Canadian Chamber of Commerce, said in a statement. “We hope to see it ratified by membership in the coming month, putting an end to the uncertainty for Canadian travellers, as well as businesses and communities who depend on Air Canada’s cargo network every day.”

But the threat of a strike or lockout already caused disruptions for businesses as flights could have been cancelled as early as Sunday.

“Tourism operators cancelled events, international guests were scrapping plans to come, weddings were disrupted,” said Dan Kelly, president and CEO of Canadian Federation of Independent Business. “This shows what happens when these negotiations are taking place.” 

The threat of the Canadian railway strike this past summer, show that the transportation sector is in for a bumpy ride ahead with labour disputes becoming “an expected part of life.” 

Negotiations had stretched on for nearly 15 months between Air Canada and the union with the central issue being pay — the two sides said they remained far apart on in the lead-up to Sunday’s announcement. 

The pilots’ union argued Air Canada continues to post record profits while expecting pilots to accept below-market compensation. It had also said about a quarter of pilots reported taking on second jobs, with about 80 per cent of those doing so out of necessity.

The airline had previously said it had offered salary increases of more than 30 per cent over four years, plus improvements to benefits, and said the union was being inflexible with “unreasonable wage demands.” 

Labour Minister Steven MacKinnon applauded the new deal in a statement early Sunday morning, saying that “negotiated agreements are always the best way forward.”

“Thanks to the hard work of the parties and federal mediators, disruptions have been prevents for Canadians,” MacKinnon wrote. “I wish to salute the efforts of Air Canada and its pilots, who approached the discussions with seriousness and resolve to get a deal.”

Last week, Air Canada, alongside numerous business groups, called on the government to intervene, including the Canadian Federation of Independent Business and the Canadian and U.S. Chambers of Commerce.

“The Government of Canada must take swift action to avoid another labour disruption that negatively impacts cross-border travel and trade, a damaging outcome for both people and businesses,” said the chambers and the Business Council of Canada in a statement Friday.

The union, however, issued a statement asking the government refrain from getting involved and to respect the workers’ rights.

“Recent government interventions to end labour disputes in the federal sector have negatively altered employers’ willingness to do the hard work required to conclude fair collective agreements with their employees,” said ALPA Canada Capt. Tim Perry. “With recent federal intervention, employers are treating government as their silent partner and have included intervention as part of their bargaining strategy, to the detriment of Canadian workers.”

Prime Minister Justin Trudeau had emphasized that it was up to both sides to figure out an agreement, and that the government would only intervene if no negotiated agreement was feasible. 

With files from Asma Sahebzada and The Canadian Press