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Air Canada (AC.B-T) braced on Wednesday for the possibility of a crippling strike during next week's busy March Break travel period even as the labour minister signaled she was prepared to stop or limit any labor action if necessary.
Air Canada's 8,600 unionized mechanics, baggage handlers and cargo agents have said they will go on strike at one minute after midnight on Sunday night unless a contract settlement is reached beforehand, a move that analysts said will ground Canada's biggest airline.
"If the machinists go out the airline does not fly. Period," said Robert Kokonis, managing director of airline consulting firm AirTrav Inc.
Labour Minister Lisa Raitt urged the two sides to negotiate a deal to avoid a strike, saying a work stoppage is "not in the best interests of the Canadian public or Canadian businesses".
"The government of Canada is committed to doing what it takes to protect the public interest and help unions and employers achieve constructive labour relations," she said in a statement.
A strike would come at an awkward time for Air Canada as next week is spring break for schools in many parts of Canada and March is generally a busy flying month.
Air Canada's "lines of communication" with the union remain open, spokeswoman Angela Mah said, adding that the airline, which flies to more than 180 destinations on five continents, was endeavoring to minimize inconvenience to customers.
The union, the International Association of Machinists and Aerospace Workers, said in a bulletin on its website that talks had broken off late Tuesday afternoon.
It said it had issued strike notice "when it became evident that the company was not prepared to make adjustments needed to produce a satisfactory agreement" for its members.
The federal government has not been shy in the past to step in quickly to block strikes or end them at Air Canada, as well as at Canada Post, either by legislation or other means.
This is the third time in nine months that Air Canada has faced a strike after a year of contract negotiations with all its unions.
Ticketing and customer service staff walked off the job for three days in June. In September, flight attendants were on the verge of a strike when the government stopped them.
Sunday's strike threat comes after 65 percent of the machinists' union membership that voted rejected a tentative four-year contract deal that the union had negotiated with Air Canada.
There is still time for the two sides to reach a second agreement, PI Financial airlines analyst Chris Murray said, pointing out that they may not be so far apart given that the tentative agreement had been defeated by only a narrow margin.
"Even if they can't get something fully in place by Sunday, any labour interruption, I expect, would be very short-lived," Murray said.
Raitt's statement did not say if she would pass back-to-work legislation to prevent a strike, but it said: "Canadians gave our government a strong mandate to protect the economic recovery and create jobs."
"I encourage both parties to continue bargaining and reach a new collective agreement as soon as possible," Raitt said. "The government is concerned that a strike is possible and is taking this situation very seriously."
Meanwhile, Air Canada remains in mediated labour talks with its pilots, who are also in a position to call a strike.