Air Canada employees walk off the job at Pearson Airport in Toronto just after midnight on June 14, 2011.
Customer service agents at Air Canada have walked off the job after union negotiators balked at the airline's proposals to revamp pensions.
The Canadian Auto Workers union, which represents about 3,200 airport check-in agents and 600 call centre staff, is warning its members that management wants to gut the carrier's defined-benefit pensions, which provide a guaranteed level of payout on retirement.
Shortly after the clock ticked past the strike deadline at 11:59 p.m. on Monday, union leaders said management refused to budge over the contentious issue of pension reforms.
"To tell you that I'm disappointed on behalf of the entire bargaining committee that we could not get a deal is an understatement. We're as frustrated as one could imagine at this particular time," CAW national president Ken Lewenza said early Tuesday.
He said Air Canada wants to slash payouts to new retirees and weaken pensions for new hires by forcing them to join less-attractive, defined-contribution plans.
The airline said it has contingency plans in place to maintain its full flight schedule, aided by more than 300 managers and nearly 1,400 non-union staff at nine major Canadian airports.
At Canada's largest airport, Pearson International in Toronto, arriving travellers were greeted by several striking workers waving banners.
The workers were occupying a large section of the sidewalk outside the busy terminal, but were not impeding access to the facility.
Inside, Air Canada staff and managers were assisting travellers and guiding them toward self-serve terminals.
The country's largest carrier is recommending that passengers obtain boarding passes online, show up early at the airport and avoid checking in bags at the counter, if possible, to help cope with long lineups. Passengers will also be steered toward self-service kiosks, where boarding passes can be printed and baggage tags are available.
"Air Canada put a very solid proposal on the table, a very generous one, we felt," airline spokesman Peter Fitzpatrick said. "It would have enabled Air Canada employees with 25 years experience to retire with a full pension at age 55, which is a very good pension. As well, current retirees would not have suffered any change to their pension. In return, what we were asking for was that the CAW agree to put new hires on a defined-contribution plan," effective Jan. 12, 2012.
Mr. Fitzpatrick said labour leaders have allowed ideology to overrule the best interests of union members.
Flights at Billy Bishop Toronto City Airport won't be affected because Air Canada has contracted out its Toronto-Montreal route to non-union counter staff, pilots and flight attendants, industry observers say.
Smaller airports should be able to run relatively smoothly because many staff there work for Jazz Air, a regional carrier that is gradually repainting its planes to the Air Canada Express brand. But long lineups are anticipated starting Tuesday at air terminals in Vancouver, Edmonton, Calgary, Winnipeg, Toronto's Pearson International Airport, Ottawa, Montreal, St. John's and Halifax.
Travellers phoning customer service lines will be rerouted to call centres in Tampa, Frankfurt, Paris and London.
The CAW has joined forces with two other unions to battle what they consider to be the airline's attack on pensions.
On the pension file, the CAW is collaborating with the Canadian Union of Public Employees and the International Association of Machinists and Aerospace Workers. CUPE represents 6,800 flight attendants and the IAM represents 8,300 mechanics, baggage handlers and other ground crew at the Montreal-based carrier.
The three major unions, which have been in their respective contract talks with management for weeks, say the rebounding economy has strengthened the airline's finances. The unions say they oppose Air Canada's plans to place new hires on defined-contribution pensions because it would create a two-tier system.
Labour leaders say they are developing their own ideas to reduce the cost of pensions, but creating defined-contribution plans for new employees would be too drastic.
But Air Canada argues that its defined-benefit pensions are in jeopardy because of the heavy burden of funding. "Over the past eight years, Air Canada was faced twice, in 2003 and 2009, with situations where the pension deficit could not be managed because of its size and threatened to bankrupt the company," airline management said in a letter to employees late last week.
Air Canada argues that its $2.1-billion pension solvency deficit "is not sustainable and has not been sustainable for most of the decade, and this puts at risk both the health of the company and the pensions of all employees."
CAW leaders said they aren't swayed by the letter. "It is our members and other workers at Air Canada that have experienced first-hand the challenges of the airline, and absolutely deserve a fair and equitable collective agreement in this round of bargaining," the CAW said in a newsletter sent to its members late Sunday.
Air Canada also has to reach agreements with its other unions this summer.
Last month, the 3,000-member Air Canada Pilots Association rejected a tentative labour pact. Negotiators for the pilots expect to return to contract talks by early July.
With files from CP
Brent Jang