Air Canada, union present arbitration proposals

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Air Canada, union present arbitration proposals

The Canadian Press Published Friday, October 28, 2011 3:40PM EDT

Tories intervention grounds Air Canada strike plans

Text:

MONTREAL - Air Canada and the union representing flight attendants have presented proposals that will form the basis of an arbitrator's new collective agreement.

Both parties have agreed not to divulge the contents of their presentations.

But the carrier's desire to start a low-cost carrier, along with wages, working conditions and pensions are among the areas expected to be decided by a Canada Industrial Relations Board arbitrator.

Unlike the pension ruling for customer service workers, the arbitrator for the flight attendants' contract won't be forced to choose between the two proposals.

That means the contents of the ruling slated to be delivered by Nov. 7 are unpredictable.

Industry analysts believe the federal government's determination to prevent strikes has limited any material dropoff in advance bookings.

But Air Canada's (TSX:AC.B) shares took a beating in the third quarter, falling 36 per cent despite posting a 3.8 per cent growth in traffic growth as it grappled with labour negotiations and a string of negative economic headlines.

The airline's regional partner, Chorus Aviation (TSX:CHR), suffered a 25 per cent dip in share price, while shares of WestJet Airlines (TSX:WJA) fell only 15 per cent as traffic grew 7.7 per cent.

Walter Spracklin of RBC Capital Markets expects the industry will face "a hard landing despite resilient traffic data" when it reports quarterly results next week.

Montreal-based Air Canada's adjusted profit is expected to slip to 48 cents per share from 91 cents a year ago despite an eight per cent growth in revenues to $3.3 billion.

Analysts polled by Thomson Reuters also expect WestJet's EPS to slip three cents to 34 cents per share on $785 million of revenues, which would be up 15 per cent on the year.

Chorus EPS should drop one cent to 14 cents per share as revenues increase six per cent to $402 million.

The International Air Transport Association upgraded industry profit forecasts in September to US$6.9 billion from US$4 billion. But expects profits in 2012 will fall to US$4.9 billion on margins of 0.8 per cent.