Union threatens job action over Air Canada legal move

Air Canada jets sit on the runway at Toronto's Pearson airport in 2009. - Air Canada jets sit on the runway at Toronto's Pearson airport in 2009. | Fred Lum/The Globe and Mail

brent jang — TRANSPORTATION REPORTER    Globe and Mail

The union representing Air Canada (AC.A-T1.34-0.01-0.74%) sales and service agents is threatening job action after accusing the airline of provoking a fight when it appealed an arbitrator’s ruling on pensions.

Ken Lewenza, national president of the Canadian Auto Workers, said he will be meeting with his legal staff and bargaining committee to decide by early November on the union’s next move, including the possibility of work slowdowns.

“We’re going to respond – either work-to-rule or complaining to the Canada Industrial Relations Board and other alternatives. A strike would be our absolute last approach,” Mr. Lewenza said in an interview Monday.

He made the comments after Air Canada filed court applications to appeal a decision last month by arbitrator Kevin Burkett, who sided with a union proposal to place new hires into hybrid pensions that blend the carrier’s defined-benefit system with less costly defined-contribution plans.

About 3,800 customer service agents at airport counters and call-in centres staged a three-day strike in mid-June. In late June, CAW members approved a four-year agreement, with the understanding that the contentious pension issue would go to binding arbitration. Defined-benefit pensions provide a guaranteed level of payout on retirement, but defined-contribution plans don’t.

Air Canada is trying to undo the pension ruling because the CAW won and management lost, Mr. Lewenza said. “If the employer can blatantly violate the collective agreement, the question is if they can do it, why can’t we do it? I’m reviewing every option open to us. We’re not going to take this standing still,” he said.

Air Canada spokesman Peter Fitzpatrick said the company is being prudent by challenging the pension decision, given the ripple effect on new hires. “The judicial review of the Burkett award in no way violates the terms of the collective agreement. Judicial reviews of arbitration awards are an established option and in this particular case we have concerns that Mr. Burkett may have acted beyond his jurisdiction,” Mr. Fitzpatrick said in a statement.

In its court filings, the airline alleged that the three-person arbitration board chaired by Mr. Burkett made mistakes by “relying on its own erroneous actuarial interpretations, assumptions.” Air Canada is seeking a judicial review to quash the arbitration award, which backed the union’s plan and dismissed the carrier’s pitch to place new employees into defined-contribution plans.

The airline’s court filings also say that the arbitration panel unfairly accepted union revisions to the CAW’s final offer on pension changes.

Montreal-based Air Canada is striving to control its retirement-related costs as it grapples with a $2.1-billion pension solvency deficit. The airline averted a financial crisis in 2009 with the help of its unions, but the company’s payments into its pensions are forecast to soar in 2014 because a cap on contributions previously negotiated with unions will lapse at the end of 2013.

Mr. Lewenza said the union already made sacrifices at the bargaining table, including agreeing to reduced payouts for employees who opt for early retirement starting on Jan. 1, 2013.

Management’s move against the CAW will place further strain on the corporate culture at the airline, which has been embroiled in a bitter dispute with its flight attendants. The Canadian Union of Public Employees, which represents 6,800 Air Canada flight attendants, will be going to arbitration to settle its differences with management over wages, working conditions and a proposal to start a low-cost carrier. A “final and binding decision” in the CUPE contract dispute is scheduled for Nov. 7, Air Canada said last week.

“Air Canada has enough labour relations problems on its hands already,” Mr. Lewenza said. “The airline should be concentrating on customer service instead of this ongoing butting heads with us. For them to be undermining the arbitration process is so disrespectful. The lack of integrity hurts our relationship long term.”

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