Air Canada plans to resume flights later on Sunday, a day after the government issued a directive to end a cabin crew strike that caused the suspension of around 700 daily flights, stranding more than 100,000 passengers. Thousands of Air Canada flight attendants walked off the job on Saturday, for the first time since 1985, after months of negotiations over a new contract.

The country’s largest carrier said flights would restart on Sunday evening, but some would still be canceled over the next 7-10 days as the schedule stabilizes and returns to normal. It had started cancelling flights on Friday in anticipation of the stoppage.

The Canadian Industrial Relations Board (CIRB) ordered Air Canada to resume operations and all Air Canada and Air Canada Rouge flight attendants to return to their duties by 2 p.m. ET (1800 GMT), the airline said in a statement. The CIRB was acting on a directive from the country’s Jobs Minister Patty Hajdu as the government moved to end the strike and require binding arbitration to break a contract impasse, an action that Air Canada had previously sought from Prime Minister Mark Carney’s minority Liberal government but unionized flight attendants fiercely opposed. The most contentious issue in the contract negotiations has been the union’s demand for compensation for time spent on the ground between flights and when helping passengers board. Attendants are now largely paid only when their plane is moving.

Market Signals

The strike and subsequent government intervention impacted Air Canada's stock, which saw a 14.25% drop in July 2025.
Competitors like WestJet and Porter Airlines gained traction during the disruption.
The strike underscores a broader trend of rising labor costs and union demands across the airline industry.

Winners & Losers

Competitors such as WestJet and Porter Airlines benefited from Air Canada's operational disruptions. Air Canada incurred significant revenue losses (estimated at $98 million daily) and suffered reputational damage. Over 100,000 passengers were stranded. Both the Canadian Chamber of Commerce and the Business Council of Canada welcomed the government's intervention.

Action Timeline

Immediate (24-48h): Monitor Air Canada's operational resumption, analyze market sentiment, and assess competitor actions.
Short-term (1-2 weeks): Track Air Canada's operational recovery, analyze arbitration outcomes, and evaluate customer satisfaction.
Long-term: Assess the impact of arbitration decisions on Air Canada's future labor costs and labor relations across the industry.

Risk Assessment

Regulatory Risk: Government intervention through binding arbitration could lead to legal challenges from unions.
Financial Strain: Potential mandated wage increases could strain Air Canada's operating margins.
Geopolitical Tensions: Statements from the Jobs Minister mentioning "unprecedented tariffs the US has imposed on Canada" suggest broader geopolitical factors could influence government decisions in labor disputes.

Key Indicators

A clear signal of the aviation sector's sensitivity to labor disputes.
The government's intervention sets a precedent for resolving labor disputes in critical infrastructure sectors.
Rising labor costs and increasing union demands across the airline industry.

Regional Perspective

The Canadian government's intervention to end the Air Canada cabin crew strike through binding arbitration reflects the government's concern for economic stability and the impact on stranded Canadians.

Immediate Implications

Air Canada will resume flights Sunday evening, but further disruptions are possible over the next 7-10 days.
Opportunity for investors to hedge against volatility in the aviation sector.
A chance for rival airlines to increase market share during Air Canada's disruption.

What to Watch

The outcome of the binding arbitration for the new collective agreement.
The pace at which Air Canada returns to normal operations.
Any similar developments in labor relations between other major North American airlines and their unions.
The government's role in resolving future labor disputes.

Analysis

The government's use of binding arbitration to end the Air Canada strike marks a significant development in labor-management relations within Canada's airline industry. This approach may reshape future negotiation dynamics, emphasizing the need for operational stability and broader economic considerations.