Liquidity-challenged Air Canada has approached the Canadian government about a possible loan.
The carrier has had ongoing discussions with government agency Export Development Canada "about some possible borrowing terms," Canadian finance minister Jim Flaherty told reporters today during a briefing in Ottawa.
Air Canada's cash balances have dwindled as its pension deficit has reached C$3.2 billion ($2.83 billion). The Star Alliance carrier also has roughly C$660 million in debt maturing during the next six to 12 months.
Flaherty's remarks come as the carrier yesterday tentatively extended a collective agreement with its pilots' union and reached a conditional pension deal, including a 21-month pension funding moratorium with the unions representing both its pilots and cabin crew.
Arrangements with the Air Canada Pilots Association (ACPA) and the Canadian Union of Public Employees (CUPE) follow the carrier inking provisional pension deals last week with the unions representing Air Canada's flight dispatchers, customer service and sales agents as well as its technical, maintenance and operational support, clerical and finance employees.
The airline has now secured a conditional pension funding moratorium with all five of its home-based unions. But member ratification is outstanding and the agreement is subject to Air Canada obtaining new financing, each union being granted an equity stake in the company and a consultation process with non-unionized employees and retirees.
The federal government must also adopt an amendment to the funding rules for the carrier's pension for the moratorium and fixed payments to take effect.
In the meantime, the tentative deals "enhance Air Canada's ability to obtain additional financing to manage through the recession," Air Canada president and CEO Calin Rovinescu says in a statement.
The union deals also mean Air Canada can focus on obtaining governmental approvals for the funding arrangement and on raising new financing, he says, adding that discussions are taking place with "several potential lenders".
In addition to reaching tentative, temporary pension funding moratoriums with the Canadian Airlines Dispatchers Association (CALDA), the Canadian Auto Workers (CAW) and the International Association of Machinists and Aerospace Workers (IAMAW), a pension funding moratorium agreement has also been signed by the Air Canada Pionairs, an association that serves but does not bind its 15,000 retired members of Air Canada or its predecessor airlines.
Source: Air Transport Intelligence news
