A last-minute deal between Air Canada and its pilots has averted a labour disruption that many expected would greatly impact Canada’s economy. The company and the Air Line Pilots Association (ALPA), which represents Air Canada’s more than 5,200 pilots, arrived at a four-year tentative agreement on the eve of Sept. 15, just ahead of the anticipated 72-hour strike or lockout notice. The Financial Post’s Denise Paglinawan explains what we know about the deal and what comes next for Air Canada and its customers.

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Air Canada and its pilots reached a last-minute agreement to avert a strike. Here's what we know about the deal so far Back to video

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What’s in the deal?

Citing an unnamed source, Bloomberg said Air Canada offered to increase the aviators’ pay by four per cent annually over three years, plus an upfront 26 per cent pay boost, along with other benefits.

The pilots’ union leaders voted to approve the modified terms of the collective agreement, which, if ratified by members, wiIl cost the company approximately $1.9-billion, the ALPA said. This represents a Bloomberg in compensation over the four-year term, according to Bloomberg.

How does this compare to the pilots’ existing contract?

Air Canada pilots have been working under a decade-old contract, signed in 2014. It includes a base salary set on a pay scale that increases two per cent each year.

According to Air Canada, its captains earned on average between $215,075 and $351,958 per year in 2023, depending on the type of aircraft they fly. The average narrow body aircraft pilot works 13.31 days per month and the average wide-body aircraft pilot works 11.78 days per month.

Air Canada had previously offered the pilots a 30 per cent wage increase, which it said the union refused, publicly citing U.S. based wage levels.

How does it compare to contracts at U.S. airlines?

Air Canada pilots have sought to close a pay gap with their U.S. counterparts. Charlene Hudy, the ALPA’s Air Canada chair, said members were looking for a comparable contract to those at their competitors, including United Airlines Inc. and Delta Air Lines, whose pilots are also represented by ALPA — the largest union of its kind in the world.

In March of last year, pilots at Delta signed a deal that includes a 34 per cent cumulative pay increase and a lump-sum one-time payment, among other benefits. In September of the same year, United Airlines pilots approved a contract with a total compensation increase of up to 40 per cent, including an immediate pay boost of 13.8 per cent to 18.7 per cent.

Is the new agreement in line with pilot contracts in Canada?

In June 2023, WestJet, the country’s second largest airline next to Air Canada, reached a deal with its pilots that included a 24 per cent pay raise over four years. Under the new contract, a top B787 Westjet pilot would earn $319.25 an hour, increasing to $347.16 by 2026, as reported by Reuters last year. In comparison, a pilot of similar rank at Air Canada would have earned $313.81 per hour after 11 years of service under their existing contract.

Around the same time that the ALPA was negotiating a new contract for its members at Westjet, pilots at Air Canada voted to merge their union (the Air Canada Pilots Association) with the ALPA. As a result, approximately 95 per cent of commercial pilots in Canada are now represented by the ALPA.

What comes next?

After nearly a year of negotiations, the tentative agreement will be voted on by union members over the next month, and requires approval by a majority of the voting membership before it can be ratified. Until then, the specific terms of the new agreement will remain confidential.

Air Canada said customers who used the airline’s labour disruption goodwill policy, announced earlier this month, for flights originally scheduled between Sept. 15 and 23, can change their booking back to their original flight in the same cabin at no cost, providing there is space available.

Air Canada and Air Canada Rouge will continue to operate as normal, the company said.

• Email: dpaglinawan@postmedia.com

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