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Air Canada reaches tentative agreement with its five unions protecting pensions

The defined benefit pension plan remains intact with benefits protected and no other concessions were made.

Toronto (16 June 20099) – After weeks of intense negotiations Air Canada has reached tentative agreements on a 21-month pension funding moratorium with its five unions.  A deal was reach yesterday with the Air Canada Pilots Associatian (ACPA)  representing approximately 3,200 pilots and with the Canadian Union of Public Employees (CUPE) representing approximately 6,700 flight attendants.

The airline has now concluded tentative agreements on a pension funding moratorium with its entire unionized workforce in Canada, having reached tentative agreement on June 8, 2009 with its three unions – Canadian Auto workers (CAW), International Association of Machinists and Aerospace Workers (IAMAW) and the Canadian Airline Dispatchers Association (CALDA).

In addition the Company has reached a collective agreement extension with ACPA on a cost neutral basis for a period of 21 months similar to agreements reached with the IAMAW, the CAW Local 2002 and CALDA. The terms of the labour contract extension agreements of all four unions specify that there shall be no changes to wage rates and pension benefit levels during the extension period. The contract extension agreement and the pension moratorium agreement are subject to membership ratification.

The pension agreements remain conditional upon Air Canada and CUPE concluding a collective agreement extension on terms satisfactory to each of them and these discussions are ongoing.

The pension agreements call for a moratorium on past service contributions for a 21-month period and fixed payments of $150 million, $175 million, and $225 million in 2011, 2012 and 2013 respectively. Current service payments will continue to be made in the normal course and there will be no change to the defined benefit plans nor a reduction in benefits. The agreements are subject to a number of conditions including the adoption by the Federal Government of an Order-in-Council amending Air Canada's pension funding and Air Canada raising a minimum of $600 million in new financing.

In addition, the agreements call for 15 per cent equity ownership of the company to be issued to a trust for the benefit of unionized employees with proceeds of sale to be contributed to the pension plan deficit. A seat on the Board of Directors will be allocated for designation by a trustee representing Air Canada's unions while ownership exceeds two per cent. 

A pension funding moratorium agreement has also been signed by the Air Canada Pionairs, an association that serves, but does not bind, over 15,000 retirees of Air Canada and its predecessor airlines.

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More information:

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