TORONTO (Reuters) - Air Canada (ACB.TO) said a preliminary estimate of its pension solvency deficit has dropped to C$3.7 billion ($3.6 billion) from C$4.2 billion a year ago, reflecting a better-than-expected 14 percent return on plan assets.
Canada’s largest carrier said in a recently filed annual information form that the estimate, as of January 1, 2013, was hurt by a decrease in the solvency discount rate to 3 percent from 3.3 percent. Valuations to determine the actual deficit will be completed in the first half of 2013.
Earlier this month, the airline won an extension of the cap on special payments to erase its pension fund deficit. Under the plan, which smaller rivals had objected to, Air Canada will have to pay a total of C$1.4 billion over seven years, or an average of C$200 million a year, with a minimum payment of C$150 million a year.
Reporting By Susan Taylor; Editing by Leslie Adler