As Air Canada basks in the glow of a record financial performance, one of its largest unions will seek to make up some ground its members lost more than a decade ago when the airline was in bankruptcy protection.
Negotiations will begin Jan. 26 between Air Canada and Unifor, which represents about 4,000 ticket agents, gate agents, customer-service representatives and call-centre employees across the country.
"There has been little opportunity to make up for the dramatic cuts that took place during [Companies' Creditors Arrangement Act protection]," Leslie Dias, Unifor's national representative for the airline industry said in an interview. The carrier filed for bankruptcy protection in 2003 and emerged from CCAA the following year. There was some progress made during 2011 contract negotiations "but certainly not to the level that people would like to see," Ms. Dias said.
More Canadians are travelling and Air Canada's planes are flying with record numbers of passengers in their seats, but competition is growing as WestJet Airlines Ltd. expands its network and at least one new airline prepares to start up later in 2015.
Air Canada's most recent financial results – for the third quarter of 2014 – were the best of any quarter in the airline's history and analysts have raised their forecasts for future profits amid the slide in the price of oil. Jet fuel represents about 30 per cent of the airline's costs.
Unifor members have contributed to the airline's return to profitability, Ms. Dias said.
"Air Canada's costs for our group have gone down significantly," she said. "Our starting people make $23,000 a year. That doesn't go very far."
Progressing to the top pay level of $43,000 a year from the starting rate takes 10 years now, compared with eight years before the airline entered CCAA protection she said, which is a concern because about 20 per cent of workers who have been hired since 2011 are at low pay levels. The previous contract was signed in 2011 after a three-day strike and just before the airline's employees were about to be ordered back to work by the federal government.
That contract, which was one of three contentious battles that Air Canada waged with key employee groups in 2011 as it tried to cut costs, was critical in reducing the airline's pension payments.
"They got a fair bit of change in the last contract," said industry analyst David Tyerman, who follows the airline for Canaccord Genuity Corp. "I'm not sure they need to have a huge amount of change this time around."
The airline reached a 10-year deal with pilots in October that calls for 2 per cent annual wage increases, but also opportunities to increase their wages by moving from smaller planes to larger jets and from co-pilots' chairs to pilots' seats.
That 10-year agreement provides stability and flexibility to advance the airline's growth plans, spokesman Peter Fitzpatrick said. Stability and flexibility are good for employees and customers, Mr. Fitzpatrick said.
"We know the other groups recognize the benefits to everyone of achieving our goals and that provides a good basis for discussions," he said.
Unifor is also concerned about the growth of Air Canada's low-cost airline, Rouge, and the switch of such domestic routes as Toronto-Kelowna, B.C., and Toronto-Sydney, N.S., to Rouge's schedule from Air Canada mainline.
Air Canada's labour contracts with its pilots and flight attendants for Rouge permit lower wages rates than it pays to its mainline employees.
"The company has suggested that they would like some kind of separate agreement [with Unifor] because the whole model is to have a lower set of labour costs," Ms. Dias said.
But Unifor members work at counters, gates and call centres that service all Air Canada passengers, so it becomes inefficient if the airline tries to separate those passengers and send them to a separate Rouge desk or call centre, she said.