May 30, 2011 / 3:30 PM / in 6 years

Air Canada unions says pensions are a priority

VANCOUVER (Reuters) - Three labor unions at Air Canada Inc said on Monday the preservation of pension funds ranks as one of the top priorities in their negotiations with the country’s biggest airline.

<p>A worker fuels an Air Canada jet in St. John's, Newfoundland, July 2, 2008. REUTERS/Shaun Best/Files</p>

In a joint statement, the Canadian Auto Workers union (CAW), the International Association of Machinists and Aerospace Workers (IAMAW) and the Canadian Union of Public Employees (CUPE) said they wanted workers’ defined benefit pension plans to remain unchanged.

“We will make the maintenance of the plan, including employer contributions that are the necessary consequence of past funding deferrals, a central priority during our coming collective bargaining with Air Canada,” the groups, who together represent nearly 23,000 workers at the airline, said.

The unions said Air Canada wants to cut pension benefits for existing employees and eliminate defined benefit plans, which guarantee set payment levels at retirement, for new employees.

Air Canada said it has been “discussing a number of possible solutions within the context of labor negotiations to preserve defined pension benefits for current employees”.

The carrier said the deficit in its pension fund stood at C$2.1 billion ($2.06 billion) at the start of this year and, assuming no changes to deficit levels, it expects to pay C$320 million into plans this year.

“This deficit is not sustainable and has not been sustainable for most of the decade, as it puts at risk both the viability of the company and the pensions of all employees,” Air Canada said in an emailed statement.

The airline’s labor unions are expected to be more aggressive in their demands in this round of negotiations after accepting status quo agreements and a temporary moratorium on some pension fund payments last time around to keep the carrier out of bankruptcy.

Air Canada is currently in negotiation with five unions, including one representing pilots, after their contracts expired earlier this year.

The CAW represents 3,800 customer service and sales agents across Canada at Air Canada. IAMAW’s 12,300 members at the airline include mechanics, baggage handlers, cargo agents, clerical jobs, while CUPE represents more than 6,800 flight attendants.

Air Canada’s stock was 2 Canadian cents firmer at C$2.29 on the Toronto Stock Exchange on Monday. The stock is off 34 percent this year, weighed down in part by worries about possible strikes.

Reporting by Nicole Mordant; editing by Frank McGurty

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