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Air Canada Announces Agreement to Repurpose 2009 Pension Share Trust

Air Canada, their unions and Air Canada Pionairs, the company's retirees' organization, have agreed to repurpose 17.6 million shares issued in 2009 to establish a trust, when the company’s defined benefit pension plans faced a $2.835 billion deficit.

Air Canada Boeing 787-9 Dreamliner - Courtesy Air Canada

On Friday (November 12, 2021), Air Canada announced that their unions and Air Canada Pioneers, the company's retirees' organization, have agreed in principle to repurpose approximately 17.6 million Air Canada shares which were assigned to a trust established in 2009 when the company’s defined benefit pension plans faced a $2.835 billion solvency deficit. At the time of issuance in 2009, the shares were valued at about $24 million, and are currently worth approximately $455 million based on the latest closing price on the Toronto Stock Exchange (TSX). If all conditions of the new agreement are met, shares in the trust will be gradually sold over the next 15 years, with net proceeds used to make lump sum payments to Canadian pensioners, and to offer voluntary separation packages for senior unionized employees and non-executive employees.

In Thursday’s announcement, Air Canada’s President and Chief Executive Officer, Michael Rousseau, said,

“Air Canada offers an incredible example of a company and its employees working together to overcome challenges and achieve shared success. By supporting our pension strategy since 2009, our unions, employees and pensioners have helped our company in its efforts to turn on its head a pension solvency deficit of almost $3 billion into a surplus of nearly the same amount. This was not only crucial to Air Canada's transformation into a global champion, but also helped protect our defined benefit plans.

“That cooperative spirit is on display again in this agreement to repurpose over 17.6 million shares for the benefit of our defined benefit plans' Canadian pensioners and active employees by providing a source of funding for lump sum payments to pensioners and voluntary separation packages that may be offered to senior unionized employees and non-executive employees to help them explore new alternatives if they wish. I thank all stakeholders for their foresight and continued collaboration to ensure the long-term sustainability of Air Canada and the Canadian defined benefit plans.”

Upon consummation of the agreement, trust shares valued at $150 million will be allocated for voluntary separation packages for senior Air Canada unionized employees in three rounds between 2024 and 2037, and non-executive employees by 2037. The remaining shares, currently valued at around $305 million, would be allocated for Air Canada Canadian pensioners (both union and non-union), the first $100 million of which could be paid out as early as 2022, and remaining proceeds paid out periodically through 2037.

Air Canada is Canada’s largest domestic and international airline. The Canadian flag carrier is a founding member of the Star Alliance and the only international network carrier in North America to receive a Four-Star ranking from Skytrax. For the last two years Air Canada was also named Global Traveler’s ‘Best Airline in North America.’ Additionally, Air Canada has committed to a net zero emissions goal from all global operations by 2050.

Source: Air Canada


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