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A person walks by Air Canada planes at Toronto Pearson International Airport on Friday, April 13, 2012.

Michelle Siu/THE CANADIAN PRESS

An arbitrator has selected Air Canada's final offer on a five-year contract for mechanics and airport workers over one proposed by the union.

The decision by Michel Picher concludes a new collective agreement with the machinists union "following negotiations and mediated talks that took place over a period of 14 months," Air Canada said Sunday.

New hires will be placed in a pension plan that involves participation by the airline and other companies whose employees are represented by the International Association of Machinists and Aerospace Workers. The 8,600-member union represents mechanics, baggage handlers, cargo agents, aircraft cleaners and electricians. A settlement with Air Canada's powerful pilots union is still under arbitration.

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The five-year contract expires on March 31, 2016.

"The new collective agreement maintains the current defined benefit pension plan for current employees," said Air Canada, adding that the deal "establishes a protocol for the sustainability of the pension plan taking into account any short-term funding pressures on the company."

A separate arbitrator, Douglas Stanley, will be making his decision within weeks on whether to choose the final offer submitted by airline management or the Air Canada Pilots Association. Those contract details will be closely watched because the pilots union opposes management's plans to start a low-cost carrier.

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