Air Canada machinists reject pension deal

Slim majority vote against freezing of wages, moratorium on pension funding

After a week-long vote, members of Air Canada's largest union rejected the carrier's plan to suspend pension funding for nearly two years, complicating the cash-strapped airline's efforts to steady its finances, said Reuters. A slim majority (50.8 per cent) of mechanics, baggage handlers, cargo agents and electricians narrowly voted against a proposed 21-month agreement that would have frozen their wages and put a moratorium on pension funding.

However, the finance and clerical divisions were overwhelmingly in favour of their collective agreements, at 87.5 per cent and 93.2 per cent, respectively.

Air Canada has concluded agreements for collective agreement extensions with its entire unionized workforce in Canada, in addition to having reached tentative agreements on a pension-funding moratorium. The agreements are subject to a number of conditions including ratification by the membership of each of the five unions, the adoption by the federal government of an order-in-council amending Air Canada's pension funding rules and Air Canada raising a minimum of $600 million in new financing.

The vote threatens to delay efforts by Air Canada to gain federal approval for a 21-month deferral of its pension plan, said Bill Trbovich, a spokesman for the International Association of Machinists and Aerospace Workers, which represents about 12,300 employees at Air Canada, in the Globe and Mail.

A suspension of payments is necessary for the airline to avoid filing bankruptcy protection for a second time in six years, analysts say. Air Canada has said that labour peace is crucial if it hopes to line up fresh financing to make its debt payments while riding out a sharp global slowdown in travel.

Earlier this month, the airline reached a tentative agreement with flight attendants, the last of its big unions to accept the moratorium on funding a C$2.9-billion shortfall in its pension plan.

The recent vote could embolden members of other unions to reject agreements negotiated by their leaders, said Reuters.

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