Air cargo shipments will be halted on Sept. 19 at Air Canada if pilots follow through on a threat to strike without a new labor deal.

The airline on Monday said it is finalizing contingency plans for a phased shutdown of most operations.

Talks between the company and the Air Line Pilots Association, representing more than 5,200 pilots at Air Canada (TSX: AC) and Air Canada Rouge, are stalled and the parties remain far apart on contract terms. Unless an agreement is reached by Sunday, either party may issue a 72-hour strike or lockout notice, which would trigger the carrier’s three-day wind-down plan.

“Air Canada believes there is still time to reach an agreement with our pilot group, provided ALPA moderates its wage demands which far exceed average Canadian wage increases,” said CEO Michael Rousseau in a statement. “We understand and apologize for the inconvenience this would cause our customers. However, a managed shutdown is the only responsible course available to us.”

Air Canada said it is alerting travelers and shippers about the potential work stoppage so they can adjust plans as needed.

The airline, which operates six Boeing 767-300 converted freighter jets and manages shipments carried in the lower deck of passenger planes, last week said it would soon stop accepting some shipments to minimize potential disruptions. Bookings for live animals, horses and human remains must be made no later than Tuesday, Air Canada Cargo said. The airline said it won’t accept temperature-controlled, pharmaceutical, fresh food, high-value or dangerous goods, or domestic express parcels after Thursday.

Air Canada operates 252 aircraft in 47 countries, including 35 widebody and freighter flights to the United States each week. It began operating in early June a 767 freighter to Chicago O’Hare airport from Toronto three times per week. The other freighter destinations in the U.S. are Atlanta, Los Angeles and Miami.

Without a contract resolution, Air Canada plans to progressively cancel flights over three days leading to a complete shutdown as early as 12:01 a.m. ET next Wednesday. Some aircraft could be grounded as soon as this Friday. A gradual shutdown would allow the airline to reposition or repatriate aircraft and crews in an orderly fashion so that it can quickly restore regular service once the labor dispute is resolved.

Canada’s flag carrier estimated it will take seven to 10 days to fully resume normal operations after a complete shutdown.

Air Canada and ALPA have been discussing a collective bargaining agreement for 15 months. Sixty days of mediation by the Canadian government ended on Aug. 30, triggering a three-week cooling-off period before either side can take action against the other. The pilots recently authorized union leaders to call a strike in the event talks remain stalled. The airline has offered its pilots a 30% pay hike, Bloomberg News reported last week, citing people familiar with the matter. Pilots at Canada’s largest carrier would receive a minimum 20% increase in pay upfront, which would be followed by annual hikes over three years, the report said.

Air Canada said the union “remains inflexible on its unreasonable wage demands,” arguing that it is committed to maintaining its pilots’ position as the best-paid commercial pilots in Canada, but that it it isn’t fair for the pilots to seek higher pay commensurate with U.S. rivals such as Delta and United Airlines that face different market conditions. U.S. carriers, for example, have greater revenue opportunity and negotiated their deals when pilot supply was more constrained. ALPA pilots have previously said current pay rates at Delta Air Lines are up to 45% higher than the Canadian carrier’s hourly pay rates.

WestJet, Canada’s second-largest airline, last summer averted strike action by pilots with a last-minute deal. The airline at the time was trying to launch its first all-cargo operations with Boeing 737-800 converted freighters. It deactivated its freighter network this year because of slow business.

Canada’s freight market was briefly impacted last month by a 24-hour lockout of workers by railroads. The federal government ordered the railroads to reopen and sent the dispute to binding arbitration.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

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