Quebec getting heat for dropping lawsuit against Air Canada in SSeries deal

MONTREAL – The Quebec government is coming under attack from the union representing former Aveos workers for agreeing to drop a lawsuit against Air Canada, saying the airline’s commitment on maintenance for its proposed fleet of CSeries jetliners won’t provide any benefits for a decade.

“We are astounded by the Quebec government decision regarding the former Aveos workers in their plight to get their jobs back,” said Dave Ritchie, Canadian vice-president of the International Association of Machinists.

The province’s decision to drop the suit came on the same day that Air Canada announced it had a letter of intent to buy up to 75 CSeries aircraft from Quebec-based Bombardier Inc. (TSX:BBD.B).

Air Canada (TSX:AC) has agreed that all heavy maintenance of the aircraft will be performed in Quebec by operators who haven’t yet been determined. However, deliveries of the CSeries 300 that the airline is buying won’t start until 2019, meaning heavy maintenance won’t be required for five or six years after that.

As a result, the airline will continue to conduct most of its heavy aircraft overhauls outside of Canada in places like Hong Kong, Singapore and Israel.

The union said that essentially undermines the lawsuit’s goal of recovering heavy maintenance work on Air Canada’s existing fleet.

The Quebec and Manitoba governments launched the lawsuit against Air Canada after Aveos Fleet Performance, which did much of Air Canada’s aircraft maintenance, closed in 2012 after Air Canada pulled the work. The move led to the layoff of 2,600 employees, including about 1,700 in Montreal.

The province argued that Air Canada (TSX:AC) breached its legal obligations under the 1988 Air Canada Public Participation Act, which required the airline to keep heavy maintenance operations in Quebec, Ontario and Manitoba.

Quebec won the original court decision in 2013 and the Quebec Court of Appeal decision in November.

Last month, Air Canada asked the Supreme Court of Canada to overturn the appeal court ruling.

It wasn’t immediately clear what Manitoba’s response to Quebec’s move will be.

However, Transport Minister Marc Garneau said the end of the lawsuit will allow the federal government to “clarify” the Air Canada Public Participation Act to avoid future litigation.

Air Canada CEO Calin Rovinescu said its deal with Quebec ensures the “status quo” in which such work is done abroad as well as in Trois-Rivieres, and Mirabel, Que., along with at other parts of Canada.

He said the agreement paves the way for establishing a centre of excellence that could attract other airlines if labour and cost conditions are right.

“It is up to the government to create the conditions acceptable to encourage others to come here and to create opportunities for other potential activities,” he said during a news conference with Bombardier announcing the CSeries order.

He described the deal with the Quebec government as a “good compromise” and an important ingredient in the CSeries order, but not the main factor.