Air Canada's machinists union may vote again on contract to freeze wages
Published Thursday July 2nd, 2009
MONTREAL - Air Canada (TSX:AC.B) and the union representing its mechanics and technical staff will meet Friday after workers narrowly rejected a key labour contract that freezes wages and gives the airline a break on pensions.
The International Association of Machinists and Aerospace Workers could ask its members to vote again on the tentative deal that freeze wages until March 31, 2011, union spokesman Bill Trbovich said Thursday.
The agreement needs to be approved because there aren't any pay raises to get for these workers, he said.
"We're trying to explain to them that there's no money to give out, Trbovich said from Toronto where the union bargaining team was meeting."
Air Canada says it needs immediate pension relief, and is seeking $600 million in loans to survive the recession.
The union also could ask the airline whether the tentative agreement can be tweaked in any way, he added.
Air Canada also wants the wage freeze to be approved by the roughly 10,000 mechanics, electricians, baggage handlers and cargo agents.
"We'll be meeting with the senior leadership of the IAM tomorrow to explore next steps in order to achieve a successful conclusion," said Peter Fitzpatrick, a spokesman for Air Canada.
The Canadian Auto Workers' Union representing service agents and the dispatchers' union approved a similar deal last month.
The machinists union rejected the tentative contract by a margin of 50.8 per cent.
Professor Karl Moore of McGill University said all the airline's unions have to be on board and approve labour agreements because Air Canada is "flirting" with a second court-supervised restructuring in less than a decade.
"What the union leadership has to do is to show them this is the best thing for their own jobs going forward," said Moore, who teaches at the Desautels Faculty of Management.
"The bigger issue is that they need to get on with the pension relief."
Moore also noted the rejection showed that workers were also worried about maintenance jobs being outsourced to El Salvador, where Air Canada has an engine repair agreement.
Professor Joseph D'Cruz said there's a global trend to outsourcing long and costly maintenance and repair jobs to locations where it costs less.
"It may be something in the long run that Air Canada will have to look at very seriously in order to remain cost competitive," said D'Cruz of the Rotman School of Management at the University of Toronto.
D'Cruz said there's a divide between the union's leadership and its members.
"That's a very dangerous situation when the leadership of the union is not in firm control of how the membership votes."
But he said the fear of bankruptcy may bring these workers around.
The rejection threatens Air Canada's efforts to gain federal approval to defer most of its pension payments for 21 months.
Trbovich said the union membership needs to approve the deal so that there's a united front when it comes time to ask Ottawa for changes in pension legislation.
"We need a change in legislation as to how pension plans are run."
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