Air Canada Reaches Tentative Union Agreements

Air Canada said it reached tentative agreements with three of its unions on contracts and pensions as the airline battles a cash shortage and tough competition amid the industry's worst ever downturn.

Air Canada's agreement with CALDA, the CAW and the IAMAW, was also signed by the Air Canada Pionairs, an association that serves over 15,000 retirees of Air Canada and its predecessor airlines, the company said in a statement.

Air Canada drew complaints last month when it asked unions to support a moratorium on funding its CAD$2.85 billion (USD$2.55 billion) pension deficit.

The Canadian government then appointed a mediator to try to settle the disagreements between the country's largest carrier and its unions and retirees.

A solution to the pension funding woes and concessions from unions are considered crucial to keeping Air Canada from filing for bankruptcy protection for the second time in six years.

Current service payments will continue to be made in the normal course and there will be no change to the defined benefit plans, nor a reduction in benefits, Air Canada said.

To assure labor stability, the three unions agreed to extend or renew the terms of their collective agreements for 21 months from the expiry of the current agreements in 2009, with a provision for no strike or lockout.

The terms of the extension agreement specify that there will be no changes to wage rates and pension benefit levels during the extension period, the company said.

"Agreements with ACPA and CUPE are still outstanding and we need the approval of the Federal Government to the Moratorium," CEO Calin Rovinescu said in a statement.