Air Canada Set to Suspend Majority of Operations as Pilot Union Negotiations Stall

Air Canada (AC-T), down 1.42%, is preparing to suspend most of its operations, potentially starting Sunday, as negotiations with the pilots’ union near an impasse over what the airline calls “inflexible” wage demands. This announcement came from the country’s largest airline on Monday.

Air Canada, along with its low-cost subsidiary Air Canada Rouge, operates nearly 670 flights daily. Without a resolution, the shutdown could affect 110,000 passengers each day, leading to significant disruptions.

Pilots at Air Canada are pushing to narrow the wage gap with their U.S. counterparts, who secured favorable labor deals in 2023 amid pilot shortages and high travel demand.

“Air Canada believes there is still time to reach an agreement with our pilots, provided ALPA tempers its wage demands, which significantly exceed typical Canadian wage increases,” said CEO Michael Rousseau.

The Air Line Pilots Association (ALPA), which represents over 5,200 Air Canada pilots, did not immediately respond to a request for comment from Reuters.

While negotiations continue, both sides remain far apart, according to the company.

ALPA has previously highlighted that hourly pay rates at U.S.-based Delta Air Lines are up to 45% higher than those at Air Canada.

TD Cowen analyst Thomas Fitzgerald noted last week, “We understand the frustration of Air Canada pilots, but it’s important to recognize that the pilot supply situation in the U.S. is different, making comparisons difficult.”

The union and airline entered a three-week cooling-off period on August 27, during which the union cannot strike.

Air Canada estimates it would take 7 to 10 days for normal operations to resume once a full shutdown is implemented.

The airline’s shares have dropped over 18% this year.

Air Canada is in discussions with other airlines to assist stranded passengers in the event of flight cancellations. It also noted that flights under the Air Canada Express brand will continue to operate, as they are run by third-party carriers.