The Canadian government approved an agreement between Air Canada, Montreal, and its five labor unions to halt company contributions to employee pension plans for the next 21 months, according to an Air Canada news release.
The agreement halts fixed payments of C$150 million (US$138.1 billion), C$175 million and C$225 million to the plans for years 2011 through 2013.
The plans have combined assets of about C$9.7 billion.
“Achieving an alternative pension funding solution that defers deficit funding in this environment is a major achievement and an important step forward towards stabilizing the company,” Calin Rovinescu, Air Canada president and CEO, said in the release. “In this tight credit market, the securing of new financing to meet liquidity requirements over the medium term remains our next major challenge.”
The agreement is contingent upon Air Canada raising a minimum of $600 million in new financing.