Air Canada shares up after arbitrator’s decision clears way for discount carrier

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Air Canada pilots head to work as at Pearson International Airport in Toronto on Thursday, March. 8, 2012. Air Canada pilots are concerned that the airline\'s launch of a low-cost carrier could threaten their job security, the union said Tuesday as the plans came closer to fruition after an arbitrator sided with the airline in a labour dispute.THE CANADIAN PRESS/Nathan Denette

TORONTO – Air Canada shares are up more than eight per cent after an arbitrator sided with the airline in its labour dispute with its pilots, clearing the way for Air Canada to launch a low-cost carrier.

The airline’s shares were up nine cents to $1.17 on the Toronto Stock Exchange in early trading.

A federal arbitrator chose Air Canada’s final offer Monday, ending 19 months of negotiations between the airline (TSX:AC.B) and the union representing its pilots.

The airline has said the five-year collective agreement, effective until April 2016, will give the company the flexibility it needs to compete.

But the Air Canada Pilots Association says the decision will anger pilots and drag on the airline’s future performance.

Air Canada has tried the discount route before with its launch of the now-defunct Zip Airlines.

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