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Air Canada in discussion with unions

May 4, 2009, Montreal, Que. - Air Canada says it's in ongoing discussions with its Canadian-based unions to find a way to maintain pension plans.


May 4, 2009
By Carey Fredericks

May 4, 2009, Montreal, Que. – Air Canada says it's in ongoing discussions
with its Canadian-based unions to find a way for the cash-strapped
airline to maintain its defined benefit pension plans.

The Montreal-based airline says it is asking the unions for a
moratorium on payments into the pensions, which face huge solvency
deficits.

With defined benefit pensions, it's normally the employer's
responsibility to ensure there's enough assets in the plans to cover
benefit obligations over the long term.

However, the huge drop in stock and bond values has created such
large pension deficits that many companies say they're either unable
to make up the gap or need more time to do so.

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There's also pressure in some cases for plans to reduce the
retirement benefits their funding or wind up the plans altogether,
although Air Canada said Monday its objective is to maintain its
current defined benefit plans and the current pension benefit
formula.

The company's announcement came ahead of a Canadian Auto Workers
press conference in Toronto to deal with the pension issue.