Air Canada's future rides on the outcome of ratification votes by its unionised employees. If they approve the nine agreements Air Canada has negotiated with its unions, the airline will take a huge step toward recovery. If they do not, it faces the risk of liquidation.

This is the kind of white-knuckle process Air Canada's restructuring has become. With each labour pact contingent upon all others, and negotiation with creditors and shareholders contingent upon a package of labour concessions, the recovery plan could rise or fall on each deal.

Buzz Hargrove, whose union represents Air Canada's sales agents, fears the airline could be pushed into bankruptcy because employees from other unions may not ratify. His members have approved their deal, but Hargrove says: "I have had a bad feeling about this from the outset. We have no control of other events that are happening around us."

The pilots union poses the biggest threat. The last-minute deal their union reached, after mediation with a judge, skirted an impasse only by sending the unresolved issue of scope to arbitration. In view of Air Canada's plan to scale back to smaller aircraft, this jurisdictional conflict has assumed major proportions. After initial hesitation, Air Canada's pilots' union is now recommending that the carrier's pilots ratify the six-year package.

If all labour agreements are ratified, Air Canada predicts it will save C$1.1 billion ($825 million) from its C$3 billion annual labour costs. Once that is settled, the airline hopes to deal with its lessors and other creditors.

Source: Airline Business