2011 a year of frustration for Air Canada, workers

One strike, two arbitration rulings, four rejected tentative contracts and unprecedented government intervention added up to extreme frustration for both Air Canada and its unionized employees in 2011.

It's a theme that is likely to continue for the airline in the new year.

Workers entered negotiations with high hopes of recovering some of the sacrifices they made since the airline filed for bankruptcy protection in 2003. The country's largest carrier was seeking to further reduce its cost structure by potentially launching a discount carrier and tackling its long-term pension obligations.

But neither side can claim victory, conceded the heads of the two Air Canada unions who were on the front lines in disputes this year.

"We've been to hell and back," said Ken Lewenza, head of the Canadian Auto Workers Union, which represented the only Air Canada employees who were allowed to strike this year.

"It wasn't a total victory but bargaining today isn't a total victory for our members, it's about finding compromises that our members can accept."

Under the threat of back-to-work legislation, the union's 3,800 customer service agents approved a new collective agreement after striking for three days in June. They also agreed to send the pension dispute to binding arbitration.

Pension system at issue

The ruling, which Air Canada originally planned to fight in court, sets the stage to resolve the contentious matter for other employees. New hires will receive lower starting pay and have a hybrid pension system of both defined benefit and defined contributions.

The Montreal-based company wanted all new workers shifted to defined contribution plans, where retirement payments aren't fixed.

Lewenza said the airline was headed for confrontation with its workers because its demands reflected a non-union workplace and a desire to "get us to the lowest point of operational cost."

'I think [Air Canada workers] took their frustrations out on everybodyon the government, on the company and to some degree on the union.' Paul Moist, national president,CUPE

The head of the union representing Air Canada's 6,800 flight attendants said workers are demoralized after an imposed contract failed to rectify past financial losses.

"I think they took their frustrations out on everybody -- on the government, on the company and to some degree on the union," Paul Moist, national president of the Canadian Union of Public Employees, said from Toronto.

Coalesced by their use of social media, workers twice rejected tentative agreements recommended by union negotiators. Moist's reputation itself was tarnished after he couldn't deliver on a promise to Labour Minister Lisa Raitt that the second deal would be ratified.

The minister responded to an October strike deadline by referring the flight attendants' dispute to the Canada Industrial Relations Board, allegedly over health and safety concerns during a work stoppage. The lead arbitrator subsequently imposed the last deal rejected by flight attendants.

Contract talks ahead

Raitt said she acted to protect the "fragile Canadian economy" from the disruption of a strike. The move not only grounded a planned strike, but likely ended the chance of any potential work stoppages by other Air Canada unions.

Even if the threat of strikes appears to have diminished, Air Canada faces months of difficult contract talks before it can realize labour peace.

Pilots are in the midst of conciliation and machinists are proceeding with direct talks.

The head of the pilots association said he hopes a deal can be wrapped up early in the new year and avoid a mid-February potential strike deadline.

Capt. Paul Strachan said the key will be for the airline to allow pilots to be full participants in its strategic vision.

"In so far as that's lacking, I think the corporation will find it very difficult to deal with us because we're not going to sign a blank cheque."