Air Canada Declares an Impasse in CUPE Negotiations as Midnight Threshold for a Strike or Lockout Notice Nears

• Air Canada has offered 38% in total compensation increase over four years, including to address the issue of ground pay
• CUPE seeking unsustainable increases; Air Canada asking for no concessions
• Air Canada offer to enter third-party, binding arbitration rejected by CUPE
• Air Canada looking at all options; asking government to refer parties to binding arbitration process, a proven resolution for impasses

MONTREAL, Aug. 12, 2025 /CNW/ – Air Canada today said negotiations with the Canadian Union of Public Employees, representing 10,000 Flight Attendants at Air Canada and Air Canada Rouge, have reached an impasse. The parties will be in a position to issue a statutory 72-hour strike or lockout notice at 12:01 am Eastern Time August 13, shutting down the airline as early as August 16.

Air Canada now believes the talks are at an impasse, after the union submitted a counteroffer seeking exorbitant increases, beyond those presented in earlier submissions, and today rejected an offer by the company to enter binding, third-party arbitration. The arbitration process proposed would protect the interests of the parties by having them agree on an independent arbitrator who would impartially take into account the parties’ positions to arrive at a new, balanced contract by which both would abide.

“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. 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. Air Canada is now looking at all remaining options, including a request for government-directed arbitration, to prevent a disruption or at least remove this intolerable uncertainty for our customers,” said Arielle Meloul-Wechsler, Executive Vice President, Chief Human Resources Officer and Public Affairs at Air Canada.

Air Canada remains available to negotiate with the union, but time is running short, a situation exacerbated by the fact that CUPE refused to negotiate for ten precious days while it sought a strike mandate. In the event of a disruption, Air Canada Express flights operated by Jazz or PAL Airlines will continue to operate as normal as their services are provided by third-party companies. However, these regional partners only carry about 20 per cent of Air Canada’s daily customers. Air Canada and Air Canada Rouge carry approximately 130,000 customers a day who could be affected by a disruption, this includes the 25,000 Canadians that the airline flies home from abroad each day, who could be stranded.

Air Canada Offer

Air Canada tabled a revised comprehensive settlement to the union on August 11 that provided for a 38 per cent total compensation increase over four years, with 25 per cent in the first year and sought no concessions from the union in return. The offer also addressed the issue of ground pay, improved pensions and benefits, increased crew rest and contained other improvements, including those to enhance work-life balance.

The comprehensive contract settlement proposal from Air Canada would make its Flight Attendants the best compensated in Canada. Air Canada Flight Attendant compensation and perquisites consist of several elements, including base pay, incentive awards, a pension plan, health benefits, bankable sick days, and paid vacation.

Arbitration

Air Canada proposed to the union on August 11 that the parties retain a third-party, independent arbitrator to assist in addressing outstanding issues to develop a new tentative agreement through binding arbitration, but CUPE rejected this offer. Given CUPE’s refusal, the proven option to avoid massive disruption for the travelling public is for the government to refer the matter to binding arbitration. In this regard, the company will be formally asking the government to use its powers to direct binding interest arbitration under section 107 of the Canada Labour Code. The airline believes recent government interventions in rail, port and airline labour disruptions in Canada provide a precedent.  

The Code is designed to encourage industrial peace in cases where parties reach an impasse after meaningful collective bargaining has occurred. In this case, despite the fact that there has been prolonged bargaining with an offer of unprecedented increases to total compensation for Flight Attendants, there is no prospect for resolution in the foreseeable future. Moreover, hardships and other repercussions will progressively be felt by Canadians and other stakeholders, as well as by the Canadian economy.

Potential Impact

Air Canada is now considering next steps with the aim of reducing uncertainty for customers with respect to their travel plans. As events at other airlines in recent years have shown, sudden or unmanaged work stoppages result in chaos for travellers and shippers.  An unplanned shutdown is also a major risk for the company and its other employees. Air Canada operates globally to approximately 65 countries on six continents with a fleet of 259 aircraft.

Information for customers 

Customers whose flights are cancelled will be notified and they will be eligible for a full refund, which can be obtained online at www.aircanada.com or through the Air Canada mobile app. The company 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. 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.

In the event of a disruption, Air Canada strongly recommends against customers going to the airport unless they have a confirmed booking and their flights are showing as operating (check your flight’s status on www.aircanada.com before going to the airport). Customers are also advised to use self-service tools as contact centre wait times are expected to be highly elevated. 

Under Canada’s Airline Passenger Protection Regulations, customers in Canada are not eligible for compensation for delayed or cancelled flights, meals, hotels or other incidental expenses for situations outside the carrier’s control such as a labour disruption, which includes a strike or lockout. Air Canada will in all cases inform passengers of their rights under applicable rules if their flight is cancelled or delayed and meet its regulatory obligations.   

About Air Canada

Air Canada is Canada’s largest airline, the country’s flag carrier and a founding member of Star Alliance, the world’s most comprehensive air transportation network. Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and Internationally on six continents. It holds a Four-Star ranking from Skytrax. Air Canada’s Aeroplan program is Canada’s premier travel loyalty program, where members can earn or redeem points on the world’s largest airline partner network of 45 airlines, plus through an extensive range of merchandise, hotel and car rental partners. Through Air Canada Vacations, it offers more travel choices than any other Canadian tour operator to hundreds of destinations worldwide, with a wide selection of hotels, flights, cruises, day tours, and car rentals. Its freight division, Air Canada Cargo, provides air freight lift and connectivity to hundreds of destinations across six continents using Air Canada’s passenger and freighter aircraft. Air Canada’s climate-related ambition includes a long-term aspirational goal of net-zero greenhouse gas emissions by 2050. For additional information, please see Air Canada’s TCFD disclosure. Air Canada shares are publicly traded on the TSX in Canada and the OTCQX in the US.

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