June 16, 2009 / 5:08 AM / 9 years ago

CORRECTED - UPDATE 2-Air Canada, unions ink pension deal

(Corrects paragraph 2 to show Air Canada has not yet reached an agreement on labor stability with CUPE)

* Says reaches deals with ACPA and CUPE

* Deal calls for 15 pct equity stake to be issued to trust

* Company seeking C$200 mln in loans from Canadian govt (Adds dateline, details on loan requests)

TORONTO, June 16 (Reuters) - Air Canada said it has completed tentative agreements with all its unionized workforce on a pension funding moratorium.

The cash-strapped carrier reached agreements on a 21-month pension funding moratorium with the Air Canada Pilots Association (ACPA) and the Canadian Union of Public Employees (CUPE). It also reached a deal with ACPA on labor stability, but not with CUPE.

The agreements are subject to a number of conditions including that Air Canada raise a minimum of C$600 million in new financing.

The airline has asked the Canadian government for up to C$200 million, the Globe and Mail said in a report on Tuesday.

The expectation in Ottawa is that Air Canada would seek loans on commercial terms from Export Development Canada, a Crown corporation. Another option would be the Business Development Bank of Canada, another government-backed Crown corporation lender, the report said.

Any government loans would be backed by the carrier’s assets, notably planes and aircraft parts, said the article, citing an industry official.

Canada’s largest airline said the agreements with the unions call for 15 percent equity ownership of the company to be issued to a trust for the benefit of unionized employees, with proceeds of a sale to be contributed to the pension plan deficit.

The company said pension agreements also include a moratorium on past service contributions for a 21-month period and fixed payments of C$150 million, C$175 million, and C$225 million in 2011, 2012 and 2013, respectively.

ACPA represents about 3,200 pilots and CUPE represents about 6,700 flight attendants.

Air Canada, which is looking to secure financing to help it ride out one of the worst downturns in the airline industry’s history, reached tentative deals with three of its unions last week.

Air Canada’s class A shares closed flat at C$1.45 on the Toronto Stock Exchange on Monday. (Reporting by Euan Rocha; Chakradhar Adusumilli in Bangalore, editing by Dave Zimmerman)

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