strike.

The airline's 5,100 flight attendants have rejected the last contract offer and are prepared to go on strike, possibly on Thursday, if negotiations fail, union officials said.

Eighty-nine percent of the workers voted to reject the company's offer -- throwing Bermuda's Toronto and Halifax links into question if the strike goes ahead.

Pamela Sachs, president of the Air Canada branch of the Canadian Union of Public Employees, said the vote should send a strong message to the airline about the flight attendants' determination.

Key issues in the contract dispute include pension benefits and health and safety. Wages are not a problem.

The airline faces a strike deadline of midnight tomorrow. Air Canada said its planes will be grounded if there is a strike or lockout.

Laura Cooke, an airline spokesman, said negotiations are continuing.

Meanwhile, Air Canada said it has taken a number of precautionary measures to minimise problems should its flight attendants walk off the job.

As of yesterday, customers with full and reduced fare tickets booked on Air Canada flights between July 8 and July 14 were able to swap their tickets or get full refunds without penalty, subject to availability.