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The five unions representing Air Canada workers are calling on the Office of the Superintendent of Financial Institutions (OSFI) to require the airline to fund its pension plan, before being permitted to wind-up its holding company
Toronto (11 February 2009) - The five unions representing Air Canada workers are calling on the Office of the Superintendent of Financial Institutions (OSFI) to require ACE Aviation Holdings Inc. to fund Air Canada's pension plan, before being permitted to wind-up the holding company.
ACE intends to seek shareholder approval for a company wind-up at a special meeting to be held on April 7, 2009. ACE is the parent company of Air Canada and was created in 2004 with the re-emergence of Air Canada from bankruptcy protection.
In a letter to OFSI, Koskie Minsky, the law firm representing the unions, called on it to take immediate steps to ensure that Air Canada plan members and pensioners are adequately protected.
During the 2004 Air Canada restructuring under the federal Companies' Creditors Arrangement Act (CCAA), Air Canada workers made significant concessions, including extending the amortization period of unfunded pension liabilities from five to 10 years.
The intention at the time was to provide Air Canada with short-term cash flow to allow the company to restructure into a profitable, and ultimately successful airline, said Leslie Dias, president of CAW Local 2002. "There is no way that these arrangements would have been made if the pension plan was not to be repaid."
"Now, not only has ACE failed to oversee the necessary restructuring to put the airline back on track, the company is threatening to pull out of Air Canada when the airline is facing a major pension shortfall and huge challenges with the faltering economy," said Dias.
Background information
- ACE owns 75 per cent of Air Canada shares;
- Air Canada's third quarter financial statements show a loss of $298 million for the first nine months of 2008;
- In December 2008, Air Canada entered into a sale-and-lease-back loan with GE Capital to obtain a sum of $195 million;
- Days later in the Toronto Star, ACE Chair, President and CEO Robert Milton, on the topic of the proposed wind-up, said: "Air Canada has given us [ACE] the impression that they were not in need of cash;
- ACE Chair, President and CEO Robert Milton received $42 million in compensation;
- Since 2004, ACE shareholders have received $2 billion, generated from the sale of Air Canada group companies to outside buyers.