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File photo of Air Canada planes at the Toronto's Pearson Airport.

TOMMY CHENG/AFP / Getty Images

Air Canada is seeking damages from the union representing flight attendants, alleging that bargaining in bad faith and threats to go on strike scared away many customers.

In its complaint to the Canada Industrial Relations Board, Air Canada argues that negotiators for the Canadian Union of Public Employees fumbled their way through two botched rounds of labour talks. CUPE also kept its members fired up about walking off the job, even after federal Labour Minister Lisa Raitt indicated that any strike would be illegal, the carrier said in a 10-page submission to the CIRB.

Air Canada said the combination of uncertainty surrounding labour talks and strike threats contributed to the loss of revenue as the company had to forgo rebooking fees and nervous travellers switched to rival carriers. Air Canada said the "erosion of customer confidence" harmed its reservations and that it also incurred expenses to develop flight contingency plans in the event of a strike.

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On Wednesday, CUPE leaders cancelled plans for 6,800 flight attendants to walk off the job, just hours before the strike deadline.

Over the past three months, flight attendants have turned down two tentative agreements that had been recommended by their own union leaders.

The airline said CUPE made "representations to Air Canada without having conducted any formal surveys of its membership. It is Air Canada's understanding that CUPE's conclusions were based solely on e-mails and reviews of Facebook discussions."

Flight attendants staged rallies Thursday in Montreal and at Ms. Raitt's constituency office in Milton, Ont. They protested what they view as Ottawa's political interference with the bargaining process and demonstrated against her strategy to halt any strike before it could even begin.

"I have asked the CIRB to review the situation at Air Canada to ensure that the health and safety of the public will not be impacted," Ms. Raitt said in a statement Wednesday.

Officials from Air Canada and CUPE will be discussing procedural matters Friday at the CIRB, notably setting dates for hearings.

"We're simply going to ask what arguments they want to present and how they want to present them. The board won't have the power to quash the ministerial referral," said CIRB executive director Ginette Brazeau, who added that it isn't "normal practice" for the board to award damages to compensate a complainant.

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CUPE declined comment Thursday about Air Canada's complaint. But CUPE national president Paul Moist said the union will be voicing its opposition to Ms. Raitt's decision to refer the labour dispute to the CIRB and effectively remove the right to strike.

"We'll be in front of the industrial relations board, arguing vigorously to preserve our right to withdraw our labour if we feel we need to," Mr. Moist said in an interview. "The minister is abusing her authority."

The main sticking points are wages, working conditions and employees' anxiety over a proposal to start a low-cost carrier. Other concerns include management's plans to charge more money for workers travelling on flight passes.

Air Canada said Mr. Moist personally offered assurances that "should a second tentative agreement be reached, CUPE would get it ratified."

On Thursday, CIBC World Markets Inc. analyst Kevin Chiang slashed his 52-week target price on Air Canada to $1.75 from $3.50. He cited the ripple effects from labour strife and the carrier's fight with the Competition Bureau about an alleged monopoly over 10 transborder routes.

"Air Canada's unions have taken a more militant stance, which may put at risk longer-term strategies," including plans to launch a discount leisure airline, Mr. Chiang said in a research note.

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