Air Canada unions oppose pension plan proposal

TORONTO - Three unions representing Air Canada flight attendents, ground crews, counter personnel and other workers say they are not supporting the company's plan to introduce a defined-contribution pension plan for new workers.

The unions say they want Air Canada's defined benefit pension model to come off the table in current contract talks.

Defined benefit plans are designed to provide retirees with a predictable income, but they expose the employer to additional costs if the the pension fund's assets aren't able to pay for the benefits.

With defined contribution plans, the employer's contribution is limited to a negotiated amoung and payouts to retirees under the plan will depend on the performance of the underlying investments.

Air Canada was forced into creditor protection from April 2003 to September 2004, largely because of the cost of dealing with the company's pension deficit.

During the 18-month restructuring process, Air Canada's unions agreed to accept numerous concessions worth billions of dollars in savings to enable the company to survive but they insisted their defined benefit pension plans be saved.

"While the precise features of the pension are determined through the normal collective bargaining process, the fundamental structure of our pension is not up for negotiation," the unions said in a statement Monday.

"We will make the maintenance of the plan, including employer contributions that are the necessary consequence of past funding deferrals, a central priority during our coming collective bargaining with Air Canada."

The three unions - International Association of Machiniests and Aerospace Wrokers, Canadian Union of Public Employees and Canadian Auto Workers - said airline employees agreed to help the company through the global economic crisis by allowing it to defer major pension contributions.

"The purpose of the deferrals was obviously not to provide the company with a subsequent excuse to eliminate pension benefits," the unions said, explaining that it conceded to give the company financial breathing room at a critical period, with the expectation that Air Canada would later make up for it once financial circumstances improved.

The unions said company executives receive defined benefit pension credits, and regular workers should receive the same.

The CAW, which has about 3,800 members at Air Canada, set a strike deadline for June 13 at midnight. More than 98 per cent of local members voted in favour of striking, if necessary, to support their efforts for a new collective agreement.

If talks fail to reach a settlement with the CAW, the airline said it plans to maintain full operations by implementing a contingency service plan at airports and call centres to minimize impact on customers.

The CUPE represents 6,800 flight attendants and IAMAW represents 11,000 mechanics, baggage and cargo handlers, and warehouse staff.

Last week, Air Canada pilots voted to reject a tentative agreement negotiated between their union and Canada's largest airline, which responded by saying it will carry on business as usual. The Air Canada Pilots Association said 67 per cent of the votes cast by its members were against the agreement

Air Canada is Canada's largest domestic and international full-service airline providing scheduled and charter services to more than 175 destinations.

It is the world's 15th largest airline serves 33 million customers annually.