Today, Patricia Lannon, President of the Air Canada Pionairs, issued a statement regarding Air Canada’s announcement of its agreement (read the press release here) with both the Pionairs and the Canadian unions to repurpose shares held in trust from 2009 to support its pension plans:
“On behalf of the Pionairs and Air Canada retirees, we are pleased to confirm that an agreement between the Pionairs and Air Canada and its Canadian unions has resulted in an outcome that will hopefully support our retirees in Canada with lump sum payments in the coming years. If all conditions are met, some of the proceeds could be distributed in lump sum payments to eligible Canadian retirees that could begin as soon as the end of 2022.
“This agreement is a testament to the Pionairs’ main priority to safeguard and enhance the pension benefits of Air Canada retirees. The success of this agreement proved that working collaboratively in a professional and thoughtful manner can yield impressive results for our membership, and I could not be more pleased. Thanks to the efforts of the Pionairs Pension Committee team, we were able to achieve a positive outcome that kept the best interests of our members in the forefront.”
This all began in 2009 when Air Canada and its employees faced a $2.835 billion solvency deficit in its defined benefit Canadian pension plans. Air Canada, the Air Canada Pionairs and Air Canada’s Canadian unions worked together to help address this solvency deficit. As a result of their mutual cooperation at that time, a total of 17,647,059 Air Canada Class B voting shares were issued to a trust. The net proceeds from the sale of these shares would be used in future to pay solvency deficits in the Canadian pension plans if it became necessary. Since that time, the financial position of the pension plans has so significantly improved that it showed a $2.9 billion solvency surplus as of January 1, 2021.
The value of the shares in trust have also grown substantially to about $455 million compared to the $24 million value in 2009 when the shares were issued to the trust. Now Air Canada, the Canadian unions and the Pionairs have agreed to repurpose the shares for lump sum payments to pensioners, and voluntary severance opportunities for senior unionized employees and non- executive managers.
Once all the transactions are approved by the regulators and completed, trust shares worth $150M will go towards voluntary separation packages. Remaining trust shares (valued at about $305M based on the latest TSX closing price for AC shares) would be allocated for lump sum payments to Air Canada Canadian pensioners (unionized and non-unionized). Of this amount, the first $100M could be paid as early as the end of 2022 or 2023 at the latest. The remaining available proceeds will be paid out periodically until 2037.
“By maintaining a professional and knowledgeable working relationship with both the Canadian unions and Air Canada, the Pionairs team was able to achieve the best possible agreement for its members, and this is what the Pionairs are all about”, said Ms. Lannon.
” Helping our members get the most out of their retirement is what we try to do, every day. And today I could not be more proud to be a part of this very special organization.”
The agreement details are being finalized and are subject to regulatory and other approvals. More information will be provided as it becomes available.
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