Air Canada court ruling sees ex-maintenance workers aim for $100M in compensation

The tail of the newly revealed Air Canada Boeing 787-8 Dreamliner aircraft is seen at a hangar at the Toronto Pearson International Airport in Mississauga, Ont., Thursday, February 9, 2017. (Mark Blinch, The Canadian Press)

Air Canada could have to pay more than $100 million in compensation to workers who lost their jobs at maintenance centres more than a decade ago, say lawyers in a class-action suit.

A 2022 ruling in Quebec Superior Court found the airline violated federal law by failing to keep three centres operational when Aveos Fleet Performance Inc. -- the contractor that ran them -- collapsed in 2012.

Air Canada has filed an appeal, which has not yet been heard.

This week, the judge decided on a formula to calculate lost wages and other damages for the 2,200 former employees of the shuttered Aveos plants, located in Montreal, Winnipeg and Mississauga, Ont.

The compensation will likely top $100 million -- at least $45,400 per employee -- said Elodie Drolet-French, a lawyer representing the workers.

The ex-employees would need to make individual submissions. "There will be a process that is clear," Drolet-French said in an interview. "It will be easy."

The compensation could cover damages ranging from a loss of benefits to "loss of self-esteem," stress and divorce, according to a release in French from law firm Trudel Johnston and Lesperance.

"Although it is difficult at this time to estimate the total amount that Air Canada will have to pay as a result of the members' claims, the representative's attorneys conservatively estimate that this amount well exceeds $100 million," said Anne-Julie Asselinit, a partner at the firm.

Air Canada stressed that Monday's decision merely lays out a calculation method and calls for proof of losses from individual members.

"It is completely silent on the quantification of the total amount. Any assessment at this stage is therefore pure speculation," said spokesman Christophe Hennebelle in an email.

If the airline's appeal of the initial judgment succeeds, the latest decision from Judge Marie-Christine Hivon will not apply, he added.

If it fails, however, the potential cost could add more woes to a company that faces softening demand for leisure trips, a slow post-pandemic rebound for higher-margin corporate travel and rising competition from a rapidly expanding Porter Airlines. After a two-year industry boom, Air Canada lost $81 million in its first quarter and its share price fell 31 per cent over the past 12 months.

Aveos maintained and repaired airframes, engines and other plane components for decades. Founded in 1937 as Air Canada Technical Services, the company was spun off from the country's largest airline in 2007 before filing for creditor protection in March 2012. It laid off some 2,600 employees and padlocked its doors in Montreal, where the majority of its staff worked.

Under the Air Canada Public Participation Act, the carrier had an obligation to maintain its Montreal, Winnipeg and Mississauga centres, a task it had contracted out to Aveos. The federal government amended the law in June 2016 to ease this obligation.

The court has said contracting out did not relieve Air Canada of its legal obligations when the contractor shut down. The amendment to the law was not retroactive, the judge has stated, contrary to the company's argument.

This report by The Canadian Press was first published July 17, 2024.