ATW Daily News

Ottawa calls on former AC bankruptcy judge to mediate pension dispute

Monday June 8, 2009

Canadian Finance Minister Jim Flaherty last week appointed a mediator to try to resolve the pension funding dispute between Air Canada and its unions.

AC President and CEO Calin Rovinescu has said the carrier needs urgent relief from its C$2.9 billion ($2.6 billion) pension funding solvency deficit, but the airline's unions have rejected management's request for a funding "moratorium" (ATWOnline, May 11). Flaherty turned to James Farley, the former Ontario Superior Court judge who oversaw AC's 2003-04 bankruptcy restructuring, to serve as a mediator. Now in private practice, Farley accepted the appointment.

"Mr. Farley is a recognized authority on Air Canada's corporate structure and its challenges," Flaherty said. "The government has mandated Mr. Farley to seek a solution acceptable to all parties in respect of the pension and other issues Air Canada faces in this difficult economic climate."

AC praised the move. "As I have stated on numerous occasions over the past two months, our number one priority and focus of our efforts is to work towards an alternative pension funding solution," Rovinescu said. "We are hopeful of a rapid resolution of the pension funding issue as well as achieving labor stability, both of which are preconditions required to help the company obtain the financing needed to address the company's liquidity constraints."

The airline's labor agreements with its five unions are up for renewal at the end of June. Air Canada Pilots Assn. President Andy Wilson said AC's 3,000 pilots "look forward" to working with Farley. "All of the airline's stakeholders must work together for a restructuring of the company that will result in a strong and sustainable Air Canada," he said. The Canadian Auto Workers' Union representing 4,500 AC workers cautioned that "funding relief for the pension plan will not alone solve the airline's financial troubles."

by Aaron Karp

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