Air Canada Pilots Association

Air Canada Pilots Association

June 15, 2009 23:47 ET

Air Canada Pilots Reach Tentative Agreement on Restructuring Plan for Airline's Long-Term Viability

Plan includes pension funding holiday, equity restructuring and collective agreement

TORONTO, ONTARIO--(Marketwire - June 15, 2009) - The Air Canada Pilots Association (ACPA) today reached a tentative agreement with the airline on a restructuring plan aimed at providing Air Canada with long-term financial and operational stability.

The pilot group's tentative agreement with Air Canada includes:

- pension funding relief

- restructuring plan for the airline

- equity participation and Board representation

- a renewed collective agreement on wages and working conditions

"This restructuring plan will meet Air Canada's most immediate financial needs while also putting it on the road to becoming a sustainable business for the long term," said ACPA President Captain Andy Wilson. "As employees and creditors, we have a vital interest in the prosperity of the airline. Our restructuring agreement will help secure the future of Air Canada and ensure a meaningful portion of the airline's equity is held by its employees, who have a vital, ongoing interest in a profitable, sustainable airline."

ACPA pension plan members and their retirees are one of the airline's largest creditors, representing about 25 per cent of Air Canada's $2.85 billion pension debt. Under the restructuring plan, these employees and pensioners would provide the airline with a 21-month pension funding holiday in respect of past service costs from April 2009 through December 2010 and a dramatically reduced schedule of payments through December 2013.

This special funding protocol would effectively provide the airline with an interest-free loan that would help meet its short-term capital needs.

In exchange for this pension funding relief, plan members would receive a 15 per cent equity interest in Air Canada. Held in a trust, the equity would offer the opportunity for both active and retired employees to benefit from the increased pension funding that would result from financial success of a restructured Air Canada.

The pension plan member trust would also gain the right to appoint one representative to Air Canada's Board of Directors.

Under the restructuring plan, Air Canada would also be required to obtain other new financing and would not be permitted to divest certain business units until the end of March 2011 nor make any unusual distributions during the term of the Agreement.

ACPA has also tentatively agreed to renew its collective agreement over the 21-month period of the special pension funding arrangement. The tentative agreement contains minor changes to address some irritants that have arisen since the pilots last negotiated a contract, but does not increase net expenses for the airline.

The plan requires ratification by ACPA's members and federal regulatory approval for the proposed changes to the pension contributions.

More details of the tentative agreement will be presented to Air Canada pilots as part of the ratification process.

"As the people with one of the largest stakes in the airline, we felt it was essential that Air Canada be put on a path to long-term sustainability," Captain Wilson said. "This tentative agreement will not only re-engage employees with their airline, but ensure that Air Canada can focus on improving customer service and the air transportation connections that are essential to our country and its economy."

ACPA's restructuring plan was based on analysis completed by expert external financial and legal advisors, which indicated the only way the company could overcome its financial obstacles would be through a major restructuring. Over the last several months, pilots met with, and presented the analysis to the airline, the federal government, labour groups and other stakeholders.

The tentative agreement, developed on the basis of the pilots' proposal, was reached under the mediation process established by the federal government and led by former Ontario Superior Court Justice James Farley. "We thank Judge Farley for extraordinary efforts in helping us achieve this agreement," Captain Wilson said. "We are also thankful to the federal government for its ongoing interest in Air Canada and, in particular, Finance Minister Jim Flaherty for his timely offer of mediation."

"We are also grateful for the dedication, commitment and trust demonstrated by Katherine Thompson, Component President of the Canadian Union of Public Employees, and her CUPE colleagues, who so ably represented Air Canada flight attendants in these negotiations. We would not have been able to reach this tentative agreement without the support and assistance of our flight crew colleagues."

The Air Canada Pilots Association is the largest professional pilot group in Canada, representing the more than 3,000 pilots who operate Air Canada's mainline fleet.

Contact Information

  • Air Canada Pilots Association (ACPA)
    Paul Howard
    (905) 678-9008 x 222 or Cell: (647) 401-4521