Air Canada (AC.TO) has suspended its financial outlook as a strike by more than 10,000 flight attendants stretches into a third day—an action that’s costing about $60 million in revenue each day, according to National Bank analyst Cameron Doerksen.
Doerksen had previously pegged Air Canada’s third-quarter revenue at $68 million. While most flights are grounded, Air Canada Express regional operations continue to run, accounting for around 20 per cent of passengers but representing a smaller slice of overall sales, he noted.
Why the strike?
The strike is rooted in long-standing grievances over compensation and unpaid work. Flight attendants—represented by CUPE and encompassing about 10,000 workers—are demanding pay for “groundwork,” meaning the time spent boarding, deplaning, and waiting on the tarmac, for which they currently receive no compensation
Many earn wages roughly under $35,000 annually as confirmed by union members, which union leaders say falls below living wages in expensive areas like Vancouver.
Air Canada’s proposal includes a 38% total compensation increase over four years, though the union critiques the inflation-adjusted value and partial pay for groundwork as insufficient
This disparity has left many attendants feeling undervalued, especially given comparable roles at rival carriers—and given that their work is essential to the airline’s operations, many see the current terms as both economically unfair and unsustainable.
Cancellations & stipulations
The strike began on Saturday and quickly paralyzed much of the airline’s network. Ottawa stepped in over the weekend, directing the Canadian Industrial Relations Board (CIRB) to enforce binding arbitration. By Sunday, the CIRB ordered flight attendants back to work.
But the Canadian Union of Public Employees, which represents the striking workers continue to fight back. On Monday, the CIRB ruled the walkout illegal and demanded written confirmation by noon that the union had rescinded its strike authorization.
Even with flights grounded, Air Canada continues to face steep fixed costs. During the early months of the pandemic, the airline lost roughly $9 million in daily EBITDA (earnings before interest, taxes, depreciation, and amortization).
This time, Doerksen estimates losses could hit $25 million a day, reflecting a cost structure designed for quick ramp-up. National Bank’s forecast for Air Canada’s third-quarter EBITDA remains at $1.3 billion.
Time will tell
Doerksen believes the disruption won’t drag on for long, given the ripple effects on both travellers and the Canadian economy. He anticipates a settlement that includes a 40 per cent pay hike for flight attendants—translating to only about a 1.2 per cent increase in overall company costs spread over four years.
“Considering that the same union represents most flight attendants at other airlines, whatever contract structure Air Canada negotiates will be a template for future contracts at other carriers,” he explained. “As such, we do not see Air Canada being competitively disadvantaged.”
Despite current turbulence, Doerksen expects Air Canada to continue outperforming. By late Monday morning, shares were trading at $19.42, down 1.74 per cent.
One bright spot for the carrier: fuel prices. Doerksen projects fourth-quarter jet fuel at $0.85 per litre, below earlier forecasts of $0.90 to $0.95. That decline could add as much as $185 million to National Bank’s 2025 EBITDA projection.
Negotiations are still taking place with strikers standing firm, backed by CUPE.
