Air Canada, CAW in pension compromise; strike over

Thu Jun 16, 2011 5:43pm EDT
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By Nicole Mordant

VANCOUVER (Reuters) - Air Canada Inc and striking customer service workers reached a tentative contract agreement on Thursday, settling on a compromise on the biggest obstacle to a deal: the issue of pension benefits and who should pay for them.

Air Canada's almost 4,000 unionized airport check-in and call-center staff will return to work on Friday after going on strike early on Tuesday.

With the threat of government back-to-work legislation hanging over them, Air Canada, the country's biggest airline, and the Canadian Auto Workers (CAW) union agreed to put the issue of whether new hires should have a defined-benefit pension plan to binding arbitration.

Defined benefit plans are typically paid for by companies and are becoming rarer as employers struggle to fund yawning pension shortfalls and look to switch employees to self-funded defined contribution plans.

Air Canada, which has a market value of C$560 million ($572 million) and a pension deficit of about C$2.1 billion, was pushed to the edge of bankruptcy two years ago by heavy pension funding demands.

Under the tentative contract deal, existing employees' defined benefit plans will see only "very slight modifications", starting in 2013, and they will not suffer the large reductions that the airline wanted, CAW President Ken Lewenza told a news conference.

"The defined benefit plans that we have bargained collectively for the past 40 years ... are completely intact," Lewenza said.

He said he regretted not being to get the same guarantee in with the airline for new hires, but added that it was in the best interest of union members not to prolong the strike.   Continued...

<p>Air Canada customer service and sales staff cheer as they picket outside the International airport in Calgary, Alberta, June 14, 2011. The union representing customer service and ticket sales agents at Air Canada Inc have gone on strike after failing to reach a new labour agreement with the country's biggest airline. REUTERS/Todd Korol</p>