Air Canada CEO amazed by union's defiance of ruling to end strike

By Rajesh Kumar Singh and Allison Lampert

CHICAGO/MONTREAL, Aug 18 (Reuters) - Air Canada AC.TO CEO Mike Rousseau said on Monday the airline was "amazed" by the decision of its flight attendants' union to defy an order by the Canada Industrial Relations Board, which has declared the union's strike unlawful.

The Canadian Union of Public Employees has said the strike would continue until the carrier negotiates on wages and unpaid work. The union's move surprised investors and raised the stakes in a battle that has disrupted flights for hundreds of thousands of travelers during tourist season.

In an interview with Reuters, Rousseau blamed the impasse on a gap between the airline's offer and its union's demands, but did not share any plans to break the deadlock.

When asked if he was willing to sweeten the offer, Rousseau said while the company was "open to listen and have a conversation," he backed the company's offer for a 38% total compensation increase over four years.

"That's a good offer from our perspective," Rousseau said. "And it addresses many of the issues that we talk about, if not all the issues."

He urged the striking flight attendants to return to work, saying the strike was "illegal" and harming the airline's customers and brand.

Earlier on Monday, the company suspended its third-quarter and full-year 2025 guidance, citing the labor disruption.

"We're still amazed by the fact that CUPE is openly not following the law," Rousseau said. "And that is very disappointing from our perspective."

Air Canada shares closed down 3%.

BELOW MINIMUM WAGE

The union has said Air Canada's offer only accounts for 17.2% in higher wages over four years, leaving its younger, entry-level workers struggling against inflation.

An entry-level Air Canada flight attendant working full-time earns C$1,952 ($1,414.60) per month before taxes, which is 30% lower than that of a worker earning federal minimum wage, according to union data. Even with the airline's proposal, the attendant's earnings would remain below minimum wage, the union says.

Rousseau, however, said the company's offer would "go a long way" in addressing those issues.

Air Canada accounts for about 48% of capacity on domestic routes and is the only Canadian carrier with an extensive international network in 65 countries, Cirium data shows.

The third day of a strike by more than 10,000 flight attendants has stranded passengers of the airline, which normally carries 130,000 people daily and is part of the global Star Alliance of airlines.

Rousseau said the carrier wanted to resume service as soon as possible, but stressed it needed "the flight attendants to show up." Once cabin crews return to work, it would take the airline up to 10 days to fully restore operations, he added.

He said the airline would take care of flight attendants who traveled abroad ahead of the strike and now face difficulties returning.

"We'll have to find a way to repatriate them back to Canada in due course," Rousseau said.

Analysts at TD Cowen have urged the company to extend an "olive branch" to the union to end the impasse, adding it was frustrating shareholders.

Rousseau stressed he was the right person to lead the company through the labor dispute.

"I do think that the current structure, the current team members, are the right ones to take this company to the next level," Rousseau said.

($1 = 1.3799 Canadian dollars)