A federal arbitrator has sided with Air Canada in its labour dispute with the union representing its pilots.

Douglas Stanley selected Air Canada's final offer — a five-year collective agreement effective until April 2016 — following negotiations with the Air Canada Pilots Association that took place over a 19-month period.

"This agreement preserves our pilots' compensation and benefits in the top quartile of the North American industry and will help ensure the sustainability of the company's defined-benefit pension plans," said Calin Rovinescu, Air Canada's chief executive.

The airline was poised to lock out the pilots earlier this year, but the move was short-circuited by the federal government, which passed legislation blocking either side from initiating job action and imposing a new contract.

The move was angrily received by many of the airline's 3,000 pilots, and was followed by pilots calling in sick on more than one occasion, disrupting the airline's schedule and angering passengers. The pilots had complained that the legislation forced them to fly and accept a contract imposed by arbitration in contravention of the Canadian Charter of Rights and Freedoms.

Captain Paul Strachan, president of the ACPA and Captain Jean-Marc Bélanger, chair of the association, said Monday the outcome will only add to pilots' anger at the way they've been treated by both the government and Air Canada, which will impair the airline's future performance.

"Federally imposed arbitration could not and did not bring about a negotiated collective agreement, which would lead to the energized and motivated professional pilot group Air Canada needs to succeed," they said in a statement.

"Instead, arbitration has imposed work rules that will cost many pilots their jobs, demoralize the rest and kick other important issues years down the road, where they will fester and undermine any effort to achieve positive culture change at our airline."

Problems with machinists and counter staff

Stanley, a labour lawyer who was New Brunswick's deputy minister of labour, was suggested as a candidate by both sides.

The airline said it would not provide any further comments as details of the agreement are being communicated to employees.

Air Canada has been beset by labour problems for most of the last year with all of its major unions.

Last month, a federal arbitrator sided with Air Canada in a long-standing labour dispute between the airline and its unionized machinists, imposing the company's final contract offer, a five-year deal that includes pension changes for any new hires.

Last year Air Canada ticket agents and customer service staff staged a brief strike before reaching a deal after Labour Minister Lisa Raitt threatened to legislate them back to work. Raitt also pulled levers behind the scenes when flight attendants rejected a tentative agreement and held a strike vote.