An analyst at TD Cowen is warning that

Air Canada

risks a “pyrrhic victory,” with bargaining at a standstill and a strike by its flight attendants set to start Saturday at 1 a.m. ET.

It looks like the situation is becoming “acrimonious” so settling with flight attendants should be the priority to secure “labour peace,” Tom Fitzgerald said in a note.

Flight attendants who work on the Air Canada and Air Canada Rouge airlines are set to hit the picket lines on the weekend after issuing a 72-hour strike notice on Wednesday. In anticipation of the looming deadline, the company began cancelling flights as preparation for grounding all flights unless the two parties can come to an agreement before the deadline.

The 10,000 flight attendants, who are represented by the

Canadian Union of Public Employees

, are seeking pay for work they do on the ground ahead of a flight taking off, among other issues.

“We appreciate management wanting to be judicious on costs and not offer more than necessary in a negotiation,” Fitzgerald said, adding that he thinks it would be better for airline executives to extend an “olive branch.”

He said that a 50 per cent or 100 per cent increase in boarding pay — currently that work is unpaid — and about a one percentage point rise in annual wage growth are worth it to “secure labour peace and happy front-facing employees” while also securing good public opinion.

Fitzgerald also said that the investors he has spoken with are starting to express “frustration” with management’s approach and see their strategy as “penny-wise but pound-foolish.”

He also crunched the numbers on the cost of a strike.

For every day of the work stoppage, he said the company will lose $75 million in earnings before interest, taxes, depreciation and amortization (EBITDA), with a total hit of $300 million assuming the strike lasts three days and then operations restart two days later, something management has suggested.

Shares of Air Canada closed nearly flat on Friday at $19.77. Fitzgerald has a price target on the shares of $25.

“Ultimately, we still view the business as very attractive and believe the company will be set up well in the years ahead if it can move past this volatile post-COVID period,” he said.

• Email: gmvsuhanic@postmedia.com