Members of Air Canada's largest bargaining unit have narrowly rejected management's proposal for a pension funding moratorium, a move that puts the brakes on the cash-strapped airline's recovery plans.
After absorbing a series of pay cuts over the past six years, the workers are upset at the prospect of making more sacrifices, said Bill Trbovich, a spokesman for the International Association of Machinists and Aerospace Workers.
The IAMAW's technical, maintenance and operational support unit voted 50.8 per cent against a tentative pact that also would have frozen their wages until March 31, 2011, Mr. Trbovich said in an interview Tuesday night.
Mechanics, baggage handlers, cargo agents and electricians are part of the unit, which has more than 10,000 members.
Labour leaders had urged members of the unit to ratify the proposed 21-month collective agreement. The previous six-year contract expired Tuesday.
"We need to go back and regroup, and figure a way out of this," Mr. Trbovich said, noting that the rejection vote also threatens to delay Air Canada's efforts to gain federal approval to defer most of its pension payments for 21 months.
One option could be bringing back former Ontario judge James Farley to mediate. Ottawa appointed Mr. Farley as the mediator in early June to persuade five unions to support Air Canada's proposal to skip a $100-million pension payment due on July 30, another $60-million due on Aug. 14 and suspend further contributions until the spring of 2011.
The Montreal-based airline says it needs immediate pension relief, and it's also seeking $600-million in loans to survive the recession. Analysts say Air Canada faces the possibility of filing for bankruptcy protection for the second time in six years if it doesn't get the pension break and new loans.
Two smaller units at the IAMAW overwhelmingly supported their proposed contracts, with finance staff voting 87.5 per cent in favour and clerical workers voting 93.2 per cent to ratify.
While the largest IAMAW unit has rejected its tentative deal, if the votes of all three units are combined, then there would be a narrow approval of the pension funding moratorium, one industry official said.
Two other Air Canada unions, representing customer service agents and dispatchers, have already ratified their 21-month labour agreements. Another two unions, representing pilots and flight attendants, are scheduled to wrap up their ratification votes by mid-July.