The Canadian government looked set to legislate Air Canada's flight attendants back to work if last-ditch contract talks break down, because of concern that a strike would damage a still-fragile economy.

If there is a work stoppage ... we will act to protect Canada's economy, Labour Minister Lisa Raitt told the House of Commons less than an hour before a scheduled meeting with airline and union representatives.

The Conservative government legislated striking Air Canada call-center and check-in staff back to work in June, citing the same concerns that a strike at Canada's largest airline would hurt the economy.

The dispute with the flight attendants centers on pensions for new hires, wages and working conditions for the airline's 6,800 flight attendants. The two sides have been talking for more than 24 hours to prevent a strike, which could start at one minute past midnight on Wednesday.

The airline says it would operate on a partial schedule if there is a strike, using code-share flights operated by partner airlines.

Flight attendants at Chorus Aviation's Jazz, which operates short-haul Air Canada Express-branded flights under contract, belong to a separate union.

Air Canada's stock was down 1 percent at C$1.60, while shares of WestJet Airlines Ltd, Air Canada's main domestic competitor, were flat at C$13.61. WestJet has said it will add extra flights if there is an Air Canada strike.

ARBITRATOR RULES ON PREVIOUS DISPUTE

In a possible clue to how one issue behind the flight attendants' strike could be resolved, an arbitrator ruled this weekend on a final holdover from June's strike, imposing a compromise where new staff will earn a pension that includes both defined-benefit and defined-contribution portions.

Air Canada flight attendants, represented by the Canadian Union of Public Employees, have rejected a tentative deal that would have sent the issue of pensions for new hires to arbitration.

Air Canada was pushed to the brink of bankruptcy two years ago, and it blamed heavy pension funding demands for its troubles. Its pension deficit is C$2.1 billion ($2.1 billion).

The airline argues that it faces higher costs than its rivals, in part because its roots as a state-owned corporation mean it is subject to Canada's Official Languages Act and must be able to serve customers in either English or French.

Canada's Commissioner of Official Languages said on Monday that Air Canada needs to improve its bilingual services and the airline pledged to develop a three-year action plan to improve its compliance with the law.

The pro-union New Democratic Party said it had not decided whether to delay passage of any new back-to-work legislation as it did in June with a government bill to force Canada Post workers back on the job.

The NDP is the largest opposition party in the House of Commons. It does not have the votes to block legislation, but it can delay a bill's passage by several days.

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