By Nia Williams and Rajesh Kumar Singh

(Reuters) - Air Canada and its pilots are locked in a standoff over a new labor contract and face a deadline by Sunday to reach a deal that would avert strike action.

WHERE DO THE TALKS STAND?

If the two parties do not reach an agreement by the end of Saturday, Sept. 14, they will both have the option to issue either a strike or lockout notice, which would trigger Air Canada's three-day plan to wind down operations.

The airline would progressively cancel flights over three days, with a complete shutdown as early as 00:01 EDT (0401 GMT)on Wednesday, Sept. 18.