Supply Chain Disruption Feared as Air Canada Strike Looms

An Air Canada operational shutdown due to a labor dispute is likely, raising fears of severe disruptions to Canada's supply chain and critical cargo.

Flight-attendants-demonstrate-for-better-wages-at-an-airport

CUPE flight attendants protest for higher wages at an airport (Source: CUPE)

Air Canada has begun canceling long-haul international flights, which carry the majority of its cargo, in preparation for a planned work stoppage by flight attendants on Saturday, executives said Thursday.

The press conference in Toronto was cut short after union members walked in front of the stage with signs like "Unpaid Work Won't Fly," criticizing Air Canada's negotiating stance in the stalled contract talks.

Air Canada (TSX: AC) will progressively suspend flights until all are grounded by Saturday morning. Dozens of flights will be canceled Thursday, and by the end of Friday, about 500 flights will have been canceled, affecting more than 100,000 passengers.

"This will also impact our cargo operations and have consequences on the supply chain," said Arielle Meloul-Wechsler, chief human resources and public affairs officer. A spokesperson informed FreightWaves via email that Air Canada’s fleet of six Boeing 767-300 freighters will operate on a modified schedule, which will protect about 20% to 25% of normal throughput.

On Tuesday, the Canadian Chamber of Commerce called on the federal government to intervene to prevent a prolonged disruption to travel and commerce if the two sides can't resolve their differences. Nearly half of Canada’s pharmaceuticals that move by air are carried by Air Canada. Shipments of agricultural products, perishable foods, and parts and machinery for the manufacturing sector will all be delayed if Air Canada is forced to shut down, the business group said.

"At a time when Canada is facing unprecedented economic challenges and trade uncertainty, a service disruption would interrupt air cargo connectivity, directly impacting Canadian businesses that are working to diversify their customers in provinces across the country. The impact on business will be felt internationally too, and would lead to losses for Canadian exporters, further compounding the impacts on industries throughout our economy," the Chamber said in a statement.

The Canadian Federation of Independent Business expressed similar concerns and a desire for government intervention.

Chief Operating Officer Marc Nasr said that once the strike ends, it will take Air Canada a full week to fully restore operations.

Air Canada described the flight attendants as not being serious about reaching a deal on a new collective bargaining agreement.

According to the airline, the Canadian Union of Public Employees (CUPE), which represents 10,000 flight attendants, began negotiations demanding a compensation increase of more than 100%. The carrier made a counteroffer of a 38% increase in total compensation, including benefits and pensions, over four years. The offer also includes an increase in pay for ground duties, which is calculated separately for work performed while the aircraft is not in flight.

CUPE blames Air Canada for the breakdown in talks, saying the airline's offer is below industry standard and doesn't compensate for inflation since the previous contract was signed in 2015. The union says the employer's offer would only increase wages by 17.2% and has refused to enter into binding arbitration as a way to settle the labor dispute. Air Canada has asked the Canadian government to impose arbitration on the parties if there is no resolution by Saturday.

The union claims flight attendants are not paid for a large portion of their work time while the plane is at the gate.

"Flight attendants should be paid for every minute they spend on the job. It’s as simple as that," said CUPE National President Mark Hancock. "But instead of negotiating in good faith, Air Canada is asking the federal government to help get them off the hook."

CUPE said it submitted a proposal at 9 p.m. on Tuesday, but Air Canada has yet to respond.

Air Canada operates more than 250 aircraft to 200 destinations in over 65 countries.

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