Air Canada says it has reached an "impasse" in negotiations with the union representing its flight attendants, which on Tuesday said it declined a proposal from the airline to enter a binding arbitration process.
The latest hurdle in negotiations comes just hours before the Air Canada component of the Canadian Union of Public Employees could signal its intent to strike, or the company could declare plans to lock out flight attendants, as of this weekend.
The earliest that flight attendants could potentially walk off the job or be locked out is Saturday at 12:01 a.m. ET. Since that would require either side to provide 72 hours' notice, that means Air Canada or the union could declare plans for a work stoppage any time after 12:01 a.m. ET Wednesday.
In a statement on Tuesday afternoon, Air Canada said it will notify customers whose flights are potentially cancelled and they will be eligible for a full refund, which could be obtained through its website or the Air Canada mobile app.
The airline said it has made arrangements with other Canadian and foreign carriers and Via Rail to provide customers alternative travel options "to the extent possible."
"Customers will be notified of alternative travel options that are identified for them," it said. "However, given other carriers are already very full due to the summer travel peak, securing such capacity will take time and in many cases will not be immediately possible."
Air Canada said it "strongly recommends" against going to the airport if there is a disruption unless customers have a confirmed booking and their flights are showing as operating.
Earlier in the day, CUPE, which represents around 10,000 Air Canada flight attendants, said in an update to members that the company has "decided they no longer want to negotiate." The union attached a letter that it received from Air Canada, dated Monday, in which the airline proposed going the arbitration route to secure a new contract.
That would have suspended the union's right to strike, as well as Air Canada's right to lock out union members, the letter noted.
Last week, the flight attendants voted 99.7 per cent in favour of giving their union a strike mandate.
"After eight months of negotiation, we have been unable to reach a tentative collective agreement despite our best efforts and those of the Federal Mediation and Conciliation Service," stated the Air Canada letter, signed by executive vice-president and chief human resources officer Arielle Meloul-Wechsler.
"Engaging in interest arbitration will let the flight attendants, CUPE, Air Canada and Air Canada Rouge move forward without further delay and uncertainty, both of which weigh on us all."
The letter pointed out that Air Canada and CUPE have successfully used arbitration in previous negotiations.
But CUPE called it a "proposal to preserve an exploitative system and strip away (members') voice."
"Everyone knows that the best deals are made at the bargaining table, not handed down by an outside third party," the union said in its message to members.
It said that unlike with a tentative agreement reached through negotiations, members would not get a chance to vote on an arbitrator’s decision, which would be final.
The union also said arbitrators "rely on precedent and the status quo to make their determinations" which runs counter to its objectives in bargaining talks.
"Air Canada flight attendants are trying to break the status quo by ending the historic abuse of unpaid work in this industry," it said.
"Air Canada wants an arbitrator to do their dirty work for them to keep the status quo intact."
The union has said its main sticking points revolve around what it calls flight attendants' “poverty wages” and unpaid labour when planes aren't in the air.
It told members Tuesday it has put forward a proposal seeking cost of living enhancements each year, with a catch-up "to where we should be at for 2025." It is also seeking 100 per cent pay for all hours worked, noting Air Canada has so far proposed "to only recognize a portion of your vital safety contributions and only at 50 per cent."
The union sent a formal response letter Tuesday declining Air Canada's proposal. It urged Air Canada to continue negotiating instead.
"Our membership has been clear in providing us with a strong strike mandate, reflecting their determination to secure a contract that addresses the key issues, including wages, unpaid work, per diems, pensions, work rules, and rest provisions, many of which are still outstanding," said Wesley Lesosky, president of the Air Canada component of CUPE, in the letter.
"We remain committed to using all available tools within the bargaining process to reach a negotiated settlement that meets the needs of our members."
Air Canada said its latest offer on Monday included 38 per cent total compensation increases over four years. It said that proposal also addressed the issue of ground pay, improved pensions and benefits, increased crew rest and other enhancements to work-life balance.
The airline said that offer would make its flight attendants the best compensated in Canada. But it said the union submitted a counter-offer "seeking exorbitant increases beyond those presented in earlier submissions."
“Air Canada has been negotiating with CUPE for eight months and although we have settled many items, none of which required concessions, we remain far apart on key issues," said Meloul-Wechsler.
"We are disappointed our proposal to resolve the outstanding items fairly through arbitration has been rejected by the union and it is instead insisting on unsustainable wage increases. We are now at an impasse in talks, with the union in a position to issue a strike notice at midnight tonight, creating tremendous uncertainty for hundreds of thousands of travellers and companies shipping critical, time-sensitive goods."
Meloul-Wechsler said Air Canada is looking into its remaining options, including a request for government-directed arbitration "to prevent a disruption or at least remove this intolerable uncertainty for our customers."
Air Canada said it remains available to negotiate with the union, but cautioned that "time is running short" to avoid a disruption to its flights.
This report by The Canadian Press was first published Aug. 12, 2025.
Companies in this story: (TSX:AC)
Sammy Hudes, The Canadian Press
