Air Canada begins preparations for shutdown as union talks near impasse

(Reuters) -Air Canada is finalizing contingency plans to suspend most of its operations as talks with the pilot union are near an impasse, the country’s largest airline said on Monday.

A complete shutdown of the carrier’s operations could leave thousands of passengers stranded across the nation. Air Canada and its subsidiary Air Canada Rouge operate close to 670 flights daily.

Talks between Air Canada and the Air Line Pilots Association (ALPA), which represents more than 5,200 pilots at Canada’s largest carrier, are continuing, but both parties remain far apart, the company added.

Unless they reach a settlement, the three-day suspension plan is likely to affect 110,000 passengers daily once the total shutdown is in place, according to the airline’s projections, with the suspension likely to begin as early as Sept. 15.

Air Canada’s pilots have been advocating for unprecedented wage increases to close the salary disparity with their higher-earning U.S. peers, who achieved record contracts in 2023 amid pilot shortages and robust travel demand.

The union and the airline had entered into a three-week cooling-off period, mandated by Canadian law, on Aug. 27.

“Air Canada believes there is still time to reach an agreement with our pilot group, provided ALPA moderates its wage demands which far exceed average Canadian wage increases,” CEO Michael Rousseau said on Monday.

ALPA did not immediately respond to a Reuters request for comment.

Air Canada also anticipates it would take 7 to 10 days for normal operations to resume once the complete shutdown is in place.

The airline’s shares have lost more than 18% of their value this year.

The company is in talks with other airlines to accommodate its stranded passengers in the event of flight cancellations, it said, adding that flights under the Air Canada Express brand will continue to operate as they are operated by third-party carriers.