Mar 13, 2013
By Jane Brown
Air Canada has been granted more time by the federal government to eliminate the 4.2 billion dollar deficit in the airline’s pension plan. But there are some tough conditions attached to the pension funding extension. The Montreal based Air Canada will freeze executives’ compensation at the rate of inflation, ban special bonuses and limit management incentive programs. Finance Minister Jim Flaherty said in a statement, that “Air Canada is the country’s largest airline and contributes significantly to the Canadian economy.” But he also appeared to send a message to other organizations that might want financial aid, when he said this is an extraordinary case that required imposing strict conditions in exchange for the pension funding extension. Air Canada obtained pension funding relief in 2009, but that arrangement was set to expire on January 30th, 2014. The new agreement means that for the period from 2014 through 2020, Air Canada will make contributions to the pension plan of at least 150 million dollars a year totaling at least 1.4 billion dollars over seven years.