Air Canada is scheduled to operate 483 flights on Wednesday, with 223 cancellations, the majority of which are international routes.Christinne Muschi/The Canadian Press
Air Canada AC-T on Wednesday began its first full day of service since flight attendants went on strike on Saturday. But the airline is warning customers to expect delays and more cancellations as it ramps up after a three-day shutdown.
The company is expected to take a significant financial hit in the current quarter, but the long-term impact is likely to be contained, analysts said.
Canada’s largest airline was scheduled to fly 483 flights on Wednesday, with 223 cancellations, according to aviation-data company Cirium. International flights comprised 136 of the cancelled routes.
Air Canada is advising customers to check their flight status before going to an airport, and to arrive three hours early if they are travelling.
The airline’s 10,000 flight attendants walked off the job on Saturday after eight months of negotiations failed to yield a new labour proposal. The workers, represented by the Canadian Union of Public Employees, defied two federal back-to-work orders before ending the strike with a tentative agreement early on Tuesday morning.
The stoppage cancelled 700 daily flights, in addition to those scrubbed in the days leading up to the strike.
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Air Canada restarted service on Tuesday evening, but is faced with the task of moving crews and planes to where they are needed. The aircraft also require safety inspections after sitting for days.
A complete restoration of service will take a week to 10 days, the airline says.
The shutdown spurred Air Canada to suspend its financial forecasts for the year as it faced about $61-million a day in lost revenue during the strike, according to a Royal Bank of Canada estimate. This is on top of the costs of repositioning crews and planes, rebooking thousands of passengers and the higher labour expenses of a new agreement.
“The disruption likely caused a considerable financial loss for the airline and affected other allied sectors including tourism and those that rely heavily on air cargo,” credit-ratings company Morningstar DBRS said in a research note.
Bank of Montreal stock analyst Fadi Chamoun said the strike will reduce Air Canada’s third-quarter earnings before interest and taxes by an estimated $400-million.
Still, he said, Air Canada’s solid financial position and market strength mean it can withstand the impact of the strike and a “modest” drop in future seat sales.
“We do not expect the events to leave a lasting brand damage,” Mr. Chamoun said in a note to clients, adding that “we don’t expect the medium-to-long-term financial framework to be materially impacted.”
Air Canada executives said in July they expected to face higher expenses as the year went on, driven by rising labour costs as well as higher charges for navigation and maintenance.
The flight attendants’ four-year tentative labour agreement provides pay raises of about 16 per cent to 20 per cent over the life of the contract, depending on seniority and job type, according to people familiar with the matter. The Globe and Mail is not identifying them because they were not authorized to speak about the deal.
Junior employees will get a 12-per-cent raise in the first year, while workers with more seniority will receive 8 per cent.
In defying the back-to-work order, CUPE took a calculated risk that paid off
The tentative deal also addresses the unpaid work cabin crews perform before a flight, a major sticking point in negotiations and a widespread industry practice. The ground work at one hour’s pay starts at 50 per cent of the hourly rate in the first year and rises to 70 per cent by the fourth.
The salary portion of the agreement must be ratified by a majority of members in a coming vote, the dates for which have not been announced.
Unpaid ground work – assisting passengers on and off a plane, serving customers during delays and other duties when the plane is not moving – is a common feature of a flight attendant’s job at most airlines in North America.
The agreement sets the stage for CUPE-represented flight attendant contract talks in the fall at Canada’s other major carrier, WestJet Airlines, as well as at PAL Airlines, a regional carrier in Atlantic Canada and Quebec that also flies for Air Canada. Collective agreements for both groups expire at the end of this year. At WestJet Encore, the regional division, the collective agreement expires on July 31, 2026.
“The work for no pay was a huge issue,” said Mark Hancock, CUPE’s national president, who was at the bargaining table with Air Canada. “It remains a huge issue for our flight attendants in other companies and for workers in other industries. It’s not something that we’re going to let go of.”
He said ground pay will be among the demands when negotiations begin with WestJet and PAL.
“They’re not stupid,” he said. “They’re going to know that that’s going to be a priority for our union.”
Porter Airlines pays its cabin crews for 30 minutes of boarding time at the full hourly rate.
U.S. carriers Delta Air Lines, American Airlines and Alaska Airlines also pay for ground work.