Agreement by Unions & Pionairs to Repur. the 2009 Pens.Trust - Arrangement would see landmark repurposing of over 17.6 million Air Canada shares to allow lump sum payments to pensioners and voluntary separation packages for unionized and non-executive employees.
MONTREAL, Nov. 12, 2021 /CNW Telbec/ - Air Canada today announced that its Canadian unions and the Air Canada Pionairs have agreed in principle to repurpose about 17.6 million Air Canada shares originally issued to a trust established in 2009. The repurposed shares have a current market value of about $455 million based on their latest closing price on the Toronto Stock Exchange (TSX) compared to a market value of about $24 million when the shares were issued to the trust in 2009. If all conditions are met, the shares in the trust will be gradually sold over a period of up to 15 years with the net proceeds from the sales used to make lump sum payments to Canadian pensioners and offer voluntary separation packages for senior unionized employees and non-executive employees.
Today's announcement has its origins in mutually beneficial cooperation that began in 2009 when Air Canada and its employees faced a $2.835 billion solvency deficit in the company's defined benefit Canadian pension plans. Air Canada and its Canadian unions, namely ACPA, CALDA, CUPE, the IAMAW and Unifor, and its retirees' organization, the Air Canada Pionairs, worked together to help address this solvency deficit. In return for their cooperation at that time, a total of 17,647,059 Air Canada Class B voting shares were issued to a share trust. The intent was that the net proceeds from the sale of these shares could be used in the future to pay solvency deficits in the Canadian pension plans if this became necessary. Since then, the financial position of the pension plans has so significantly improved that it showed a $2.9 billion solvency surplus as at January 1, 2021, allowing the shares that had been put aside in 2009 to be repurposed as announced today. The solvency surplus has continued to grow in 2021 reflecting an excellent high performing investment strategy over the past 10 years while maintaining a lower risk profile.
"Air Canada offers an incredible example of a company and its employees working together to overcome challenges and achieve shared success. By supporting our pension strategy since 2009, our unions, employees and pensioners have helped our company in its efforts to turn on its head a pension solvency deficit of almost $3 billion into a surplus of nearly the same amount. This was not only crucial to Air Canada's transformation into a global champion, but also helped protect our defined benefit plans," said Michael Rousseau, President and Chief Executive Officer of Air Canada.
"That cooperative spirit is on display again in this agreement to repurpose over 17.6 million shares for the benefit of our defined benefit plans' Canadian pensioners and active employees by providing a source of funding for lump sum payments to pensioners and
voluntary separation packages that may be offered to senior unionized employees and non-executive employees to help them explore new alternatives if they wish. I thank all stakeholders for their foresight and continued collaboration to ensure the long-term sustainability of Air Canada and the Canadian defined benefit plans."