Air Canada's mechanics and baggage handlers are joining the airline's pilots in moving to arbitration to resolve their outstanding dispute with management after talks failed to reach a new contract.

The Montreal-based airline said Tuesday that it had completed a 10-day negotiation phase with the International Association of Machinists and Aerospace Workers, which represents 8,600 members at Air Canada.

The airline described the talks as constructive, and said progress was made in some areas. It said both sides will now prepare final offers to arbitrator Michel Picher.

A similar process to resolve the dispute with the airline's 3,000 pilots was announced on Saturday. Douglas Stanley was named arbitrator for the impasse with pilots.

Air Canada said it would not provide further comments relating to either arbitration process until they are concluded.

The threat of a lockout of pilots, and a strike notice from the Machinists, prompted the federal government to intervene with back-to-work legislation. The law allowed appointed arbitrators to impose settlements within 90 days.

The country's largest carrier has been engaged in an often bitter labour dispute with most of its unionized employees.

The arbitrators' decisions will resolve the final outstanding labour contracts and could decide key issues including Air Canada's ability to launch a low-cost carrier.