Air Canada cancels upcoming flights ahead of cabin crew strike

Air Canada (AC.TO), is cancelling flights from Thursday, as the country’s largest carrier winds down service ahead of a looming Saturday strike by its more than 10,000 flight attendants.

Montreal-based Air Canada said on Wednesday it plans to cease flying on Saturday after its flight attendants’ union served a 72-hour strike notice due to stalled contract talks over pay.

The standoff is disrupting service by Air Canada and Air Canada Rouge, which together carry about 130,000 customers a day. It’s also creating a fresh test for the country’s Liberal government under Prime Minister Mark Carney which was asked by Air Canada to impose binding arbitration on the two sides. Binding arbitration would stop any strike.

Canada’s Minister of Jobs and Families on Tuesday encouraged both parties to remain at the table until a deal is reached.

The dispute hinges over the way airlines compensate flight attendants. Most airlines have traditionally paid cabin crew members only when planes are in motion.

But flight attendants in North America have sought compensation for hours worked, including for tasks like boarding passengers and waiting around the airport.

The strike is set to begin at about 1 a.m. ET on Saturday. Earlier this month, 99.7% of flight attendants represented by the Canadian Union of Public Employees voted for a strike.

Air Canada has said customers would be fully refunded for cancellations, which could hit lucrative routes between Canada, the United States, Europe and Asia.

The airline also issued a lockdown notice beginning 32 minutes after the strike. It had declared a deadlock in negotiations on Tuesday, after the union rejected its proposal for binding arbitration.

The carrier had offered a 38% increase in total compensation for flight attendants over four years, with a 25% raise in the first year.

However, the union said the offer would raise actual wages by 17.2% over four years and was below inflation. Air Canada had offered to compensate flight attendants for some unpaid work but only at 50% of their hourly rate.

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Flight attendants have negotiated with more confidence, encouraged by improved airline earnings in 2024 and bumper pay deals for pilots since the pandemic.

Such concessions would raise labor costs for Air Canada, which reported a drop in second-quarter profit, weighed by weak passenger traffic to its key U.S. market.