Air Canada's mechanics, technical staff and ground workers have ratified their tentative labour deal, a move being welcomed by investors and labour leaders.

Union official Randy Smith said Wednesday in a memo that 60.3 per cent of members who cast ballots on Tuesday voted in favour of the 21-month collective agreement.

The voting result overturns an earlier rejection of the same deal by the International Association of Machinists and Aerospace Workers, whose members also include baggage handlers, cargo agents, cleaners and electricians. Aircraft mechanics are worried about jobs being relocated to El Salvador.

Union leaders had devised a backup strategy to ensure ratification of the labour pact, but that plan won't be triggered because of the support from Tuesday's vote by the IAMAW's largest bargaining unit. Only the green ballots cast on the labour agreement were counted, and there won't be any need to tally the yellow strike votes.

Air Canada class B shares jumped 15 per cent on Wednesday to close at $1.52 each, as investors gained some confidence that the carrier will be able to avoid its second filing for bankruptcy protection in six years.

Chuck Atkinson, president of IAMAW District 140, praised the labour deal's ratification, saying it protects pensions, benefits and jobs for the next 21 months.

Cash-strapped Air Canada wants to defer most of its pension funding contributions until April, 2011.

The airline said it needs relief from making payments toward its $2.9-billion pension solvency deficit or else talks to obtain key loans will collapse and place the firm in financial peril.

"We are actively in discussions with a group of institutional and corporate lenders to provide Air Canada with financing required to help it through the current recession," said a letter sent to retirees in late June.

The retirees have until Saturday to object to the proposed funding relief. If at least one-third of retirees vote against funding relief, it would defeat the pension moratorium proposal. Those who support management don't have to submit any papers, but those opposed must send in ballots to an independent firm.

Industry observers don't expect much opposition from retirees, so that means Air Canada management will be able to formally ask Ottawa to allow the airline to suspend pension funding payments. The Montreal-based carrier is also seeking at least $600-million in loans from various lenders to help weather the recession.

There are nearly 22,500 Air Canada retirees, more than 4,700 survivors of retirees and about 26,400 unionized workers.

With the IAMAW's 11,700-member technical, maintenance and operational support unit ratifying its tentative agreement, all of Air Canada's unions have now backed their labour pacts, which include consent for the company to skip a $100-million pension payment due on July 30, $60-million on Aug. 14 and avoid further pension bills until the spring of 2011.

Air Canada will still make $260-million in pension contributions this year, but is seeking to defer up to $355-million in further 2009 payments.

Air Canada chief executive officer Calin Rovinescu said he's encouraged by employees' support for the Montreal-based carrier's recovery strategy.

"This will include the execution of a disciplined and significant cost-reduction program requiring participation by certain suppliers and stakeholders, as well as new revenue generation initiatives," he said in a statement Wednesday afternoon. "At the same time we will remain focused on re-engaging our customers and ensuring that we do not concede market share to our competitors without looking for value added ways to preserve it."

National Bank Financial Inc. analyst David Newman said he expects financing from a syndicate of lenders to be in place within two weeks, just before the debt-laden airline encounters the July 30 deadline for the first of two scheduled summer pension payments.

Analysts say Air Canada still faces challenges during the recession, as revenue slumps and fares are lowered to entice passengers to fill a growing number of empty seats.