vent
7th Feb 2004, 05:46
And Now?
The 317 guys will get back?
Trinity proposes changes to Air Canada pensions
Canadian Press
Air Canada's big new investor, Victor Li's Trinity Time Investments Ltd., has a fight on its hands after proposing a major change to the employee pension plan Thursday.
Union and retiree groups said they told the Hong Kong-based investment firm it has "no legal status to make any pension proposal" and they would not negotiate with the equity investor.
Trinity was also told that its proposal to switch to a defined-contribution pension plan is contrary to collective agreements negotiated with Air Canada last May.
Trinity, which paid $650-million for a 31-per-cent stake in the insolvent airline, held separate meetings with the carrier's management and pension stakeholder representatives earlier in the day in Toronto.
"Trinity firmly believes that Air Canada can emerge from (bankruptcy-court protection) as a vibrant, successful airline with great opportunities for all of its employees," Trinity representative Harold Gordon said in a release.
"But it can't happen with a pension plan we can't afford. Especially when our main domestic competitor, WestJet, does not even provide a pension plan for its employees."
Trinity is "concerned about the volatility inherent in the company's defined-benefit (pension) plan going forward," Air Canada said in a separate release.
Trinity confirmed its full support of a funding proposal to deal with a $1.5-billion pension shortfall, but urged converting to defined-contribution plan.
Defined-contribution pensions can be easier to budget for, while defined-benefit pensions can become more costly if the investments intended to finance them start to sink -- as occurred around the world in the stock market downturn of recent years.
"Trinity's plan would not affect current Air Canada retirees," the airline said. "In addition, employees with 60 or more in combined age and service would have the option of remaining with the current defined-benefit plan."
Trinity also called for the cost-sharing of certain employee benefits to be phased in over five years. In addition, it proposed a "one-time success bonus" for all Air Canada employees after a successful public stock offering of a restructured airline.
The employee group said it told Trinity it won't agree to any pension plan changes "and that Air Canada is "legally unable" to propose any changes. The group also said it will take all steps necessary to ensure that the airline lives up to its agreement to maintain the defined-benefit plan for all Air Canada employees.
The employee group includes representatives of five unions, including pilots, and unionized and non-union retirees.
Air Canada (TSX:AC) has been operating under bankruptcy-court protection since April 1, 2003. The pension deficit is among the last significant hurdles it needs to clear before emerging from court protection.
In its last offer to unions made in October, Air Canada proposed repaying the pension shortfall with as much as $40 million a year. But the unions, which include the Canadian Auto Workers, want Air Canada to repay as much as $105 million a year.
The pension deficit fluctuates as the $7.5-billion pension plan's investments rise and fall in value. In December, Air Canada made a $120-million payment to cover its 2003 obligations.
Last May, Air Canada's unions agreed to wage cuts and other concessions that would save the airline $1.1 billion annually.
The pilots union agreed to cut 317 of the 3,200 pilot jobs at the airline and reduce the pay of some by more than 50 per cent as they move to smaller, regional jets.
The 317 guys will get back?
Trinity proposes changes to Air Canada pensions
Canadian Press
Air Canada's big new investor, Victor Li's Trinity Time Investments Ltd., has a fight on its hands after proposing a major change to the employee pension plan Thursday.
Union and retiree groups said they told the Hong Kong-based investment firm it has "no legal status to make any pension proposal" and they would not negotiate with the equity investor.
Trinity was also told that its proposal to switch to a defined-contribution pension plan is contrary to collective agreements negotiated with Air Canada last May.
Trinity, which paid $650-million for a 31-per-cent stake in the insolvent airline, held separate meetings with the carrier's management and pension stakeholder representatives earlier in the day in Toronto.
"Trinity firmly believes that Air Canada can emerge from (bankruptcy-court protection) as a vibrant, successful airline with great opportunities for all of its employees," Trinity representative Harold Gordon said in a release.
"But it can't happen with a pension plan we can't afford. Especially when our main domestic competitor, WestJet, does not even provide a pension plan for its employees."
Trinity is "concerned about the volatility inherent in the company's defined-benefit (pension) plan going forward," Air Canada said in a separate release.
Trinity confirmed its full support of a funding proposal to deal with a $1.5-billion pension shortfall, but urged converting to defined-contribution plan.
Defined-contribution pensions can be easier to budget for, while defined-benefit pensions can become more costly if the investments intended to finance them start to sink -- as occurred around the world in the stock market downturn of recent years.
"Trinity's plan would not affect current Air Canada retirees," the airline said. "In addition, employees with 60 or more in combined age and service would have the option of remaining with the current defined-benefit plan."
Trinity also called for the cost-sharing of certain employee benefits to be phased in over five years. In addition, it proposed a "one-time success bonus" for all Air Canada employees after a successful public stock offering of a restructured airline.
The employee group said it told Trinity it won't agree to any pension plan changes "and that Air Canada is "legally unable" to propose any changes. The group also said it will take all steps necessary to ensure that the airline lives up to its agreement to maintain the defined-benefit plan for all Air Canada employees.
The employee group includes representatives of five unions, including pilots, and unionized and non-union retirees.
Air Canada (TSX:AC) has been operating under bankruptcy-court protection since April 1, 2003. The pension deficit is among the last significant hurdles it needs to clear before emerging from court protection.
In its last offer to unions made in October, Air Canada proposed repaying the pension shortfall with as much as $40 million a year. But the unions, which include the Canadian Auto Workers, want Air Canada to repay as much as $105 million a year.
The pension deficit fluctuates as the $7.5-billion pension plan's investments rise and fall in value. In December, Air Canada made a $120-million payment to cover its 2003 obligations.
Last May, Air Canada's unions agreed to wage cuts and other concessions that would save the airline $1.1 billion annually.
The pilots union agreed to cut 317 of the 3,200 pilot jobs at the airline and reduce the pay of some by more than 50 per cent as they move to smaller, regional jets.