Air Canada Asks Unions for Moratorium on Pension Funding

May 4, 2009 ( - Air Canada announced it is seeking support from its unions for "a moratorium and other conditions on funding" its more than $3 billion Canadian ($2.5 billion) pension deficit.

Reuters reports that Air Canada said in a statement the moratorium would allow it to establish financial certainty over the next several years and help it maintain its defined benefit pension plans. However, the Canadian Auto Workers (CAW) union, which represents about 4,500 unionized staff at the airline, demanded that the company continue funding its pension plan.

“If the company insists on getting rid of the pensions, they’ll have the fight of their life, by not only the CAW, but all the unionized employees of Air Canada,” said Leslie Dias, president of CAW Local 2002, according to Reuters. Dias said the last time Air Canada went into bankruptcy protection, in 2003, CAW members gave up the equivalent of 20% of the overall labor costs, and the company is still in financial trouble.

The collective agreement between Air Canada and the CAW expires at the end of the month.

The news report said the CAW presented a five-point plan on Monday designed to keep the airline out of creditor protection which included a call for the federal government to retake a stake in the airline, which was privatized by Ottawa in the late 1980s. The union also said it would like to block all future bonuses to Air Canada parent ACE Aviation Holdings’ Chief Executive Robert Milton.