FP says Air Canada shares could rise on pension opt-out2015-05-28 09:43 ET - In the News The Financial Post reports in its Thursday edition Air Canada's decision to opt out of its pension funding agreement with the feds could provide significant upside to the company's share price. The Post's Kristine Owram, writing in Trading Desk, says the deal, which was struck in 2013 when the airline's pension was staring down a $4.2-billion shortfall, included a prohibition on dividends and share buybacks, as well as a cap on executive pay. Since then, a combination of strong returns and a new investment strategy has reversed the deficit into an estimated surplus of $1.2-billion. This allowed Air Canada to opt out of the funding agreement, freeing up $1.1-billion of additional cash over the next six years. "This provides a tailwind given the company is in the midst of a heavy capex period ($9-billion over the next seven years)," CIBC analyst Kevin Chiang said in a note. Air Canada also announced a buyback of up to 3.5 per cent of its outstanding shares over the next 12 months, which could as much as $5 to the current share price, Mr. Chiang said. AltaCorp analyst Chris Murray said the savings from opting out of the pension deal could be $3 per share, and the share buyback could add $1.30 to that.