TORONTO — The potential shutdown of Canada's largest airline because of a labour dispute has business groups warning of the damage it will do to an already fragile economy.
"Taking out the major national airline is just brutal, particularly right now," said Dan Kelly, president of the Canadian Federation of Independent Business.
Air Canada has already started to cancel flights, warning some 500 would be cut Friday, as more than 10,000 flight attendants are poised to walk off the job around 1 a.m. ET on Saturday if the two sides can't reach a deal.
The airline and union have blamed each other for the impasse.
A shutdown would mean disrupted travel for businesses trying to find new customers and trade partners amid U.S. tariffs, Kelly said.
"Tons of businesses are working hard to diversify their markets within Canada, or to build new trade connections overseas and with other trading partners, and this could have a very direct impact on that," Kelly said.
The tourism sector, still working to find stability, will feel an immediate hit, said Matthew Jelley, chair of the Tourism Industry Association of Canada.
"We're in the peak season of tourism and many tourism businesses are seasonal, and so what may be a calendar day may in fact be the equivalent of a week in their business."
He said the industry has already been navigating the effects of tariffs and shifting demand so the addition of a strike is especially hard to manage.
"Unfortunately the tourism industry has gone through a fair share of disruptions over the last number of years, and every time we think we get a clear moment, you know, something else comes in."
He said he hopes all parties in the airline dispute can come together and find a resolution, and in the case of government officials, that they not leave anything off the table to protect businesses and keep things moving.
Business groups have broadly called for the government to be ready to step in, especially given the precarious economic situation.
"At a time when Canada is dealing with unprecedented pressures on our critical economic supply chains, the disruption of national air passenger travel and cargo transport services would cause immediate and extensive harm to all Canadians," said Goldy Hyder, head of the Business Council of Canada in a Friday statement.
The Canadian Chamber of Commerce has made similar warnings and calls, as did the Toronto Region Board of Trade, pointing to the 130,000 travellers who fly on Air Canada daily, plus cargo operations, for the importance of its operations on the economy.
Along with passenger travel, a potential shutdown is affecting cargo shipments, with Air Canada warning any existing bookings are subject to delay or cancellation.
It says it is no longer accepting new bookings for a variety of cargo divisions including AC Horses, AC Pharmacair and AC eCommerce, while its AC Fresh division is still allowing bookings to several European capitals.
The airline says it is putting in place a modified freighter schedule to mitigate some of the disruption. It says the move will protect about 20 to 25 per cent of usual volumes, but not to all destinations usually served by Air Canada's passenger network.
Air Canada has requested Jobs Minister Patty Hajdu step in and direct the parties to enter binding arbitration, while the Air Canada component of CUPE has said it is eager to avoid a work stoppage but has urged the federal government not intervene and allow collective bargaining to continue.
This report by The Canadian Press was first published Aug. 15, 2025.
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Ian Bickis, The Canadian Press
