Air Canada union serves strike notice; employees could walk Monday night

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The Canadian Auto Workers union has issued strike notice against Air Canada, clearing the way for a walkout by 3,800 sales and service agents next week.

The CAW opposes management's proposal to place new hires on defined-contribution pensions, which don't provide a guaranteed level of payout upon retirement.

"We are determined to reach a fair and equitable collective agreement that will reflect the contributions our members have made to bring Air Canada back to prosperity," CAW Local 2002 president Jamie Ross said in a statement late Friday night.

But Air Canada argues that its existing defined-benefit plans are in jeopardy because of the heavy burden of pension funding.

The Montreal-based airline recently resumed making regular payments to its pension plans, after a 21-month moratorium on past service contributions expired at the end of 2010.

Air Canada estimates that it will be on the hook for $1.6-billion in pension-funding contributions over the next four years. Company payments are forecast to soar in 2014 because a cap on pension contributions previously negotiated with unions will expire at the end of 2013.

In a statement late Friday, the country's largest carrier stressed that it has "a contingency plan to continue operating a full schedule and minimize impact on customers," if there is a strike, which would begin at 11:59 p.m. on Monday.

However, the airline added that it's still focused achieving a settlement. "Air Canada is firmly committed to negotiating a new contract with the CAW and avoiding strike action," Air Canada chief operating officer Duncan Dee said in a statement. "We appreciate this situation may cause uncertainty for our customers and we thank them for their patience and understanding."

The CAW, which represents airport customer service agents and call centre staff, is also balking at management's bid to make it tougher to attain early retirement - staff in existing defined-benefit pension plans would have to work 30 years to qualify, instead of the current 25 years.

Other changes could slash defined-benefit pension payments to recipients by roughly 40 per cent, the union asserts.

In issuing 72-hour strike notice after 10 weeks of contract talks, union leaders hope to pressure management to withdraw the pension proposals and also cancel plans to launch a low-cost carrier.