Air Canada, Montreal, reached a tentative agreement with five labor unions to temporarily halt pension contributions for the next 21 months, according to an Air Canada news release.
The C$9.7 billion (US$8.5 billion) pension plan had an estimated shortfall of C$3.2 billion, as of Dec. 31.
The agreement Monday sets a moratorium on fixed payments of C$150 million, C$175 million and C$225 million for 2011 through 2013, respectively. As part of the pact, no changes will be made to defined benefit plans and no benefits will be reduced.
The deal also gives 15% equity ownership of Air Canada to union employees issued to a trust.
The five unions are the Air Canada Pilots Association, the Canadian Union of Public Employees, the International Association of Machinists and Aerospace Workers, the Canadian Auto Workers Local 2002 and the Canadian Airlines Dispatchers Association.
The agreement still must be ratified by union members.