A union representing nearly 5,000 Air Canada employees wants the government to take a stake in Air Canada as the carrier attempts to restructure to withstand effects of the global economic downturn.
The Canadian Auto Workers (CAW) union went on the offensive today ahead of a contract that expires 31 March. During a press conference CAW laid out suggestions they believe are best to help Air Canada shore-up liquidity.
CAW says the government is contemplating changes in airline foreign ownership as a way to for Air Canada to bolster its capital. But the union is pushing the government to take a stake in the carrier, citing successful governmental holdings in flag carriers operating in France, New Zealand and Singapore.
"We are saying the government has a role to play in stabilizing the future of this company," the union argues. CAW believes the government has a responsibility to supply the same type of support to the airline industry that it has given to other sectors. The union highlights Air Canada has lost C$6 billion (US$5.1 billion) since its privatization in 1989.
Air Canada's cash balances have dwindled as its pension deficit has reached C$3.2 billion. The carrier also has roughly C$660 million in debt maturing during the next six-to-12 months.
Speculation has mounted that the recent abrupt appointment of Calin Rovinescu as CEO is a sign that the carrier will seek a formal restructuring under the Canadian equivalent of bankruptcy protection. Rovinescu was Air Canada's chief restructuring officer during its last formal restructuring in 2003-2004.
Specific pension funding requirements by Air Canada this year are hard to determine as the carrier along with other Canadian corporation is lobbying the government for pension reform.
In a statement today Air Canada said it is engaged with unions to find a solution to allow the carrier maintain its defined benefit pension plans. Those talks have focused in seeking a moratorium on funding the pension deficit to "establish financial certainty over the next several years".
But CAW took a defiant stance today regarding pensions. "The message is forget it. Our pensions will not be held hostage." The union stresses the government should require Air Canada to fully fund its pension obligations, and establish a federal pension funding guarantee.
CAW also believes the wind down of Air Canada parent ACE Aviation should be halted, with the remaining assets invested back into the carrier. The union argues that ACE CEO Robert Milton "has already walked away with $50 million" since Air Canada's last restructuring. If the ACE wind down is successful, CAW says he stands to gain a further $20 million.
Source: Air Transport Intelligence news
