Toronto, May 21: Air Canada and a holdout union struck a tentative deal on a vast cost-cutting package, which could rescue an 612-million USD bailout for the insolvent carrier. In dramatic face-to-face talks in a Toronto hotel, Air Canada CEO Robert Milton and Canadian Auto Workers (CAW) Union boss Buzz Hargrove pulled the airline back from the brink of possible liquidation.

CAW's 5,000 members working for Air Canada in sales, service and crew scheduling are expected to discuss the deal next week before voting on it.


The airline, a member of the star alliance and lifeline to millions of Canadians, as well as a key player on Asian and European routes, slumped into bankruptcy in April 2003.

It was hit by the global downturn in air travel after the September 11 attacks in 2001, and also saw its domestic markets pressured by low-cost competitors.

Milton said in a statement that the deal met the target set for the CAW's share of USD 144 million in cost-cuts set by deutsche bank, which is underwriting a rights issue to refinance the airline.

"The CAW faced some difficult issues," Milton acknowledged, but did not provide details of the agreement.
CAW official John Amato told news agencies that the target had been reached, and in a terse statement, the union said it had reached a "tentative agreement" with Air Canada, and would discuss the deal with its members next week.


Air Canada had previously reached agreement with all its other unions on the new round of belt-tightening.


Bureau Report