Air Canada seeking approval from its unions for pension funding relief | National Union of Public and General Employees

Air Canada seeking approval from its unions for pension funding relief

Air Canada appears to be headed for a showdown with its unions over the airline’s underfunded pension plans.

Toronto (6 May 2009) – Air Canada is asking its five Canadian unions to support a temporary suspension of its pension funding requiements which the aitline says would allow it to maintain its 10 defined benefit (DB) pension plans. 

The cash strapped airline is hoping to get the authority to temporarily stop pension payments needed to offset a $3.2 billion deficit in the 10 DB plans that Air Canada manages. The company faces $660 million in debt payments this summer, a pension shortfall that has tripled in the last year.

The CAW, which represents 4,500 Air Canada ticket counter agents and call-centre employees insists that the company must fully fund its DB plans.

CAW president Ken Lewenza said “Air Canada continues to make threats to the unions regarding gutting the pension plans.  We are getting tired of seeing this movie but it now looks like we have to watch it again.”

The CAW, said the troubled airline’s total pension deficit almost tripled in 2008, from $1.2 billion at the beginning of the year to $3.2 billion on December 31.

Air Canada took a contribution holiday from 1997 to 2002 when there was surplus money in the company’s main pension plan. Then, under a court-ordered restructuring in 2003 and 2004, the airline’s unions agreed to extend the amortization period for its unfunded pension liabilities to 10 years from five years.

The CAW has propoed that the airline use its cash reserve, approximately $388 million, at ACE Aviation Holdings to make up for the deficit.  It also has proposed halting of ACE chairman Robert Milton's compensation of approximately $10 million and the return of his bonuses.


The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

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