Scotia Union Update Event
■ Air Canada's pilots ratified the new 10-year pilot deal.
Implications
■ The deal allows for a 2.6% average annual increase in compensation,
which we feel is reasonable considering the stability provided by the
contract. Also, it does not endanger the 15% CASM reduction target in
any way. The profit sharing arrangement is also slightly modified and
increases alignment between management and pilots.
■ As would be sensible in a contract of this tenure, there are re-opener
clauses every three years that would allow both parties to amend certain
conditions. We understand that wages are not subject to this re-opener
clause. Management has also agreed to certain growth projections in
terms of fleet which would certainly be welcome by pilots as it allows
career progression for the group. In return, certain constraints on growth
in the regional fleet have been amended so that the regional fleet can
grow to provide better feed traffic.
Recommendation
■ Net/net, we see this agreement as a nice positive for AC. There are very
few airlines globally that have or have had this type of tenure in their
labour agreements. As well, from what we understand, there are various
mutually beneficial clauses, which suggests a labour group that is highly
engaged. In our opinion, this is a testament to improved labour relations
at AC, which helps to reduce a key risk in the investment. Lastly, while
there is no certainty, this agreement is a great starting point for upcoming
negotiations with CUPE/UNIFOR (flight attendants/gate agents).