Risk & Crisis Management
Air Canada seeks urgent pension relief
Source : http://upi.com
MONTREAL, May 11 (UPI) -- Air Canada seeks urgent pension relief because of first-quarter losses totaling $346 million, up 39 percent from a year ago, its president said.
The airline has a "pressing need to achieve an alternate pension funding solution," President and Chief Executive Officer Calin Rovinescu told shareholders in Montreal.
Rovinescu, an investment banker and lawyer who was Air Canada's chief restructuring officer in its 2003 reorganization, has been on the job for five weeks after the Montreal company fired its chief executive officer.
The leading Canadian airline and the seventh-largest North American carrier by traffic has some 25,000 employees and 25,000 retirees, and has made $1.5 billion in pension payments since 2004. It has a $2.5 billion pension-funding solvency deficit and has asked unions for a funding "moratorium," Air Transport World reported Monday.
Rovinescu said that Ottawa was reviewing Canada's strict pension laws but that changes wouldn't come for at least six months and "in the interim we require more immediate action."
Labor contracts governing most of Air Canada's eight unions expire this month and next. In addition, one of the airline's credit-card processors can tighten its contractual covenants next month, requiring Air Canada to carry a $1.1 billion monthly cash balance, up from $778 million currently, The Wall Street Journal reported.
"Liquidity will continue to be a prime concern," Rovinescu also told shareholders.
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