Air Canada today won Canadian government support of a 21-month moratorium on pension payments, a key element in the carrier's financial restructuring.
On 15 July Air Canada won approval from the last of five unions for the moratorium, and subsequently received an endorsement of the proposal from retirees.
At the beginning of this year Air Canada's pension deficit stood at C$3.2 billion ($3 billion), and the carrier faced total pension contributions ranging from C$150-C$410 million.
Key to finalising the 21 month pension freeze, which includes fixed payments after that time from 2011-2013, was the Canadian government agreeing to amend pension funding regulations for the moratorium to take effect.
During a press conference today Canadian Finance Minister Jim Flaherty said now that moratorium has been ratified by the unions, "We can go ahead now with the regulatory change, which is my responsibility, which I'm doing today."
Flaherty stresses he would not have agreed to amend regulations without the consent of the unions and the pensioners.
Air Canada is now negotiating with various lenders over a $600 million financing package.
Source: Air Transport Intelligence news