Air Canada said late Monday that it has reached tentative deals on pension funding moratorium and collective agreement extension with three of its unions.
The airline said in a release late Monday it reached the agreements with the International Association of Machinists and Aerospace Workers, the Canadian Auto Workers union and the Canadian Airlines Dispatchers Association.
Collectively, they represent 16,500 employees or more than 60 per cent of its unionized workforce in Canada.
The pension deal calls for a 21-month moratorium on pension funding, the company said. The agreement is subject to a number of terms and conditions, including Air Canada obtaining new financing and each union being granted an equity stake in the company.
The three unions also agreed to extend or renew the terms and conditions of their collective agreements for a period of 21 months from the expiry of their current agreements in 2009.
"These agreements with three of our unions represent an important milestone in providing stability for our company during this challenging period," Air Canada president and chief executive Calin Rovinescu said in the release.
"The pension funding solution and labour stability are key conditions precedent to obtaining critical new financing for the Company," he said. "While we continue to see very difficult credit markets during this deep recession, we are in discussions with several potential lenders who are assessing our financing needs."
Earlier this month, Finance Minister Jim Flaherty appointed former Ontario judge James Farley to mediate between Air Canada and its unions and retirees over the carrier's proposal to halt its pension contributions until early 2011.
There have been reports that Air Canada might have to seek bankruptcy protection for the second time this decade unless it can reduce costs, including delaying large pension payments due in July and August.
The Air Canada Pilots Association and the Canadian Union of Public Employees, representing flight attendants, were not part of Monday's announcement, Air Canada said.
