Prime Minister Stephen Harper defended his government's intervention in the Air Canada labour dispute Friday, saying a lockout or strike would have had a significant impact on travellers and the economy.

"The position of Air Canada is different," Harper said at Toronto's Billy Bishop Airport.

"It is far and away the largest airline in the country and a shutdown of service on that airline would have significant impact not only on airline service to Canadians but on the transportation system as a whole and potentially on the economy."

Harper said the airline and its unions need to find a way to resolve their disputes without involving the public, a message delivered by his Labour Minister Lisa Raitt Thursday.

Raitt referred the dispute to the Canadian Industrial Relations Board (CIRB) effectively ending any job actions by both parties.

On Friday, the government took the additional step of adding back-to-work-legislation to the order papers for Parliament. While the board reviews the case, the airline cannot lock out its employees and the unions cannot start a strike.

Raitt said a work stoppage by Air Canada would cost the Canadians economy about $20 million a week.

"It's a logistics chain at the end of the day, it carries both cargo and people," she told CTV's National Affairs.

Raitt defended her use of putting the dispute to the Canadian Industrial Relations Board, as she has done in several other cases.

"It's important for companies and unions to remember the responsibility to negotiate is theirs," she said. "We are there . . . to help facilitate a deal. That's why we are engaged in the file."

Paul Strachan, president of the Air Canada Pilots Association, said his organization was not particularly surprised by the federal government's move.

"But our case is a little unique, in that Air Canada threatened to lock us out, it wasn't the other way around," he said on National Affairs. "What we are interested in is a bargained settlement.

"Clearly, from our perspective, we are the only party interested in that."

Meanwhile, the vice-president of the International Association of Machinists and Aerospace Workers union denied there was any secret deal between Air Canada and his union, as suggested by labour relations lawyer Howard Levitt on CTV's Canada AM Friday.

"There is no secret deal with Air Canada, we did not ask the minister to intervene, and to suggest that we did is nothing short of an outright lie," Dave Ritchie said in a release.

"We brought a tentative agreement to our membership and they flatly rejected it, end of story. Talks with Air Canada broke off Tuesday afternoon and we have not met since," he said.

Levitt had suggested the union may have secretly asked to have its dispute referred to the CIRB in order to buy time to pressure its members.

"There may be a deal already made. The government can't say that, Air Canada can't say that, but it may well be we're going to see a quick deal right now," Levitt said.

But Ritchie said you can't vote on a deal that doesn't exist. He called on the speculation to end and let the collective bargaining process continue.

Interim Liberal leader Bob Rae also entered the fray, suggesting the airline is in major trouble and the government is merely passing that off to committee.

Rae spoke to CP24 at Pearson International Airport on Friday where he was boarding an Air Canada flight to Winnipeg.

"I think there's some underlying issues we really need to deal with," Rae said.

"The airline is not in great shape and we need to face up to that as Canadians and make sure we can participate fully in the global airline business. Service is good but it's a real challenge to make it work."

Rae suggested Air Canada is struggling financially, and constant battles with its unions are not helping.

"I think what we really need to do is have a commission that looks at the whole structure of the airline to see what we can do," Rae said.

"It's not going to be settled on a normal commercial basis. We're always going from crisis to crisis and you put off the issues and put off the issues and we're not really getting at the root of the problem."

Raitt's decision to refer the matter to the CIRB came after Air Canada said it would lock out its pilots on Monday at 12:10 a.m., just 10 minutes after a strike deadline set by the company's mechanics, baggage handlers and cargo agents' union.

By sending the conflict with two unions - pilots and ground crew - to the labour board, Raitt essentially put any legal strike or lockout on hold until the board issues a ruling.

That may have saved March Break vacation plans for thousands of Canadians planning getaways on Air Canada.

March Break begins next week in Ontario and Quebec, and week later in B.C.

With files from The Canadian Press