Kip Powick Posted October 6, 2005 Share Posted October 6, 2005 Union demands Air Canada pay into strapped pension fund Federal regulator urged to pressure recovering carrier Agency says it has no power to force the airline Canada's federal pension regulator should force Air Canada, which is considering using hundreds of millions of dollars worth of excess cash to pay a special dividend to shareholders, to instead put that money into its beleaguered pension plan, the carrier's largest union says. In a letter sent yesterday to the Office of the Superintendent of Financial Institutions, (OSFI), the International Association of Machinists and Aerospace Workers, or IAMAW, asked that the regulator direct Air Canada's parent company, ACE Aviation Holdings Inc., to pump any extra cash back into its employees' pensions. "Since Air Canada has experienced unprecedented financial success in the early months following its restructuring, the IAMAW is hereby asking you as the federal pension regulator to take steps to have Air Canada put additional funds into the pension plan," the union's letter says. The union represents Air Canada's machinists, baggage handlers and other ground crew. Air Canada spokesperson Laura Cooke said the carrier is "in full compliance with the agreement it reached with OSFI and its unions for pension funding" and has contributed more than $245 million to its pension plans since it emerged from bankruptcy protection last fall. The union said in its letter to federal regulator that by putting excess cash into its pension plans, Air Canada "will not only be meeting the needs of the pension plan members and retirees, but ... will also be meeting the needs of its shareholders. "A pension plan obligation is a debt that is owed by the company and needs to be paid off. Paying the deficiency will increase shareholder value." Rod Giles, spokesman for the superintendent, confirmed the regulator received the union's letter, but said forcing Air Canada to bolster its pension plans was beyond regulator's control. As part of Air Canada's court-supervised restructuring, the carrier in May 2004 received special permission to cover its $1.2 billion pension shortfall over 10 years instead of five, as is typically required of companies. Under the agreement, Air Canada pledged to repay 43 per cent, or $516 million, of the shortfall by 2008. Air Canada's parent company disclosed in a recent securities filing that it would seek shareholder approval to hand out as much as $300 million in cash or stock. The company, which in August said it had $2.5 billion in cash on hand, wants shareholders at its Nov. 10 annual meeting to give its directors the authority to approve the payout. Yet the machinists union, which along with the carrier's other unions has agreed to more than $1 billion worth of wage and benefits concessions in the past two years, argues Air Canada should increase its commitment to close the pension deficit. "The IAMAW believes that the pension plan regulator owes a duty to all pension plan members and retirees," the union wrote. "The IAMAW also believes that the best way for you to meet the requirements of this duty would be for you to insist that Air Canada pay additional funds into the pension plan before it distributes any money to shareholders." Link to comment Share on other sites More sharing options...
CanadaEH Posted October 6, 2005 Share Posted October 6, 2005 I never saw this coming.. The union does have a point, though. Link to comment Share on other sites More sharing options...
rudder Posted October 6, 2005 Share Posted October 6, 2005 Agency says it has no power to force the airline Rod Giles, spokesman for the superintendent, confirmed the regulator received the union's letter, but said forcing Air Canada to bolster its pension plans was beyond regulator's control. I'll bet that OSFI feels as though they have been 'had' in extending the funding requirements for AC. If AC want to show that they have learned a lesson from past mistakes, then pre-funding the pension liabilities would be a good start. Link to comment Share on other sites More sharing options...
dagger Posted October 6, 2005 Share Posted October 6, 2005 I never saw this coming.. The union does have a point, though. How's your pension plan at Westjet, by the way? Link to comment Share on other sites More sharing options...
dagger Posted October 6, 2005 Share Posted October 6, 2005 I'll bet that OSFI feels as though they have been 'had' in extending the funding requirements for AC. If AC want to show that they have learned a lesson from past mistakes, then pre-funding the pension liabilities would be a good start. Why would they feel they have been had. The OSFI agreement was absolutely essential to attracting new capital, and that new capital was essential to giving AC the signs of stability that gave creditors hope that if they put in new money, it wouldn't go down the drain. Looking at the OSFI's situation with AC versus the Pension Guaranty Board's situation with U.S. airline pensions, one would have to conclude that OSFI officials must be saying, "There but for the grace of God go I" You might also take note that the solution the PGB is considering is to give companies 25 years to make up pension deficiences, whereas the AC deal is 10 years (with nine years still to go). Link to comment Share on other sites More sharing options...
CanadaEH Posted October 6, 2005 Share Posted October 6, 2005 How's your pension plan at Westjet, by the way? My my someones panties are all in a bunch this morning. Why take the issue so personal? I can play too, only my version is a little more personal [Edited by Admin - Consider this a warning Canada Eh. You have already been told that will not be tolerated - http://forum.aeforum.net/index.php?showtopic=87516 ] Link to comment Share on other sites More sharing options...
dagger Posted October 6, 2005 Share Posted October 6, 2005 My my someones panties are all in a bunch this morning. Why take the issue so personal? I can play too, only my version is a little more personal [Edited by Admin - Consider this a warning Canada Eh. You have already been told that will not be tolerated - http://forum.aeforum.net/index.php?showtopic=87516 ] No, just asked you a question. You know that I know the answer. Most of us know the answer. So it was a rhetorical question. You should be somewhat more preoccupied with your own lack of a pension plan, even a defined contribution plan, because you won't always be young, and you may want to retire early. When the profit sharing cheques were fat, maybe this didn't matter. Now, they are less fat, even pitiful, in some years. You would be well-advised to be asking your CEO about protecting your living standard when you retire. He, a handful of founding partners, and some senior pilots are pretty much guaranteed a nice retirement. Are you? Link to comment Share on other sites More sharing options...
CanadaEH Posted October 6, 2005 Share Posted October 6, 2005 No, just asked you a question. You know that I know the answer. Most of us know the answer. So it was a rhetorical question. You should be somewhat more preoccupied with your own lack of a pension plan, even a defined contribution plan, because you won't always be young, and you may want to retire early. When the profit sharing cheques were fat, maybe this didn't matter. Now, they are less fat, even pitiful, in some years. You would be well-advised to be asking your CEO about protecting your living standard when you retire. He, a handful of founding partners, and some senior pilots are pretty much guaranteed a nice retirement. Are you? Who are you to lecture me or any of my coworkers on how my company pays us? What do you have to gain by pretending like you are in my shoes? Link to comment Share on other sites More sharing options...
Steam Driven Posted October 6, 2005 Share Posted October 6, 2005 " You would be well-advised to be asking your CEO about protecting your living standard when you retire. He, a handful of founding partners, and some senior pilots are pretty much guaranteed a nice retirement. Are you?" As has been mentioned - ad nauseam - the beauty of our plan is that it is tailored to each individual not the lowest common denominator. Every person has their own risk tolerance and the ability to diversify as they see fit. Or not for that matter. Our man Canada Eh is a smart cookie. I'm sure he's got advice and he's well positioned. One thing that he has that you and I don't is time. He's young, he's investing and he's taking advantage of a tool to take care of his future. A tool not available to many working people today. As for the guarantee of a nice retirement, why don't you ask some United Pilots about how "Guarantee's" work these days... Link to comment Share on other sites More sharing options...
Stickle Posted October 6, 2005 Share Posted October 6, 2005 It was a rhetorical question and one that shouldn't have been asked. Let it go Dagger. If AC was the least bit concerned about employee relations, which I think they aren't, they would prefund some of what they are short in the pension fund. I really have to wonder if AC and the unions will ever get to a point of mutual cooperation. Link to comment Share on other sites More sharing options...
E-HANDLE Posted October 6, 2005 Share Posted October 6, 2005 No, just asked you a question. You know that I know the answer. Most of us know the answer. So it was a rhetorical question. You should be somewhat more preoccupied with your own lack of a pension plan, even a defined contribution plan, because you won't always be young, and you may want to retire early. When the profit sharing cheques were fat, maybe this didn't matter. Now, they are less fat, even pitiful, in some years. You would be well-advised to be asking your CEO about protecting your living standard when you retire. He, a handful of founding partners, and some senior pilots are pretty much guaranteed a nice retirement. Are you? Oh, now that's just nasty, brother dagger. I mean, Mr. brother dagger. If you know as much as you think you know, you can tell us all about ESP at WestJet. You know, the one that matches your contribution up to 20%. The DB pension plan at CRA was for 4% matched. Do they still give to some 30 year old money manager to invest in-gag-mutual funds? I'm glad they have a pension at Jazz, but I'd rather not trade in my 20% ESP for that type of pension. At WJ we can take out our portion any time. The 20% the company contributes can be withdrawn after a year. Then you can give it to a real financial manager if you choose. Link to comment Share on other sites More sharing options...
dagger Posted October 6, 2005 Share Posted October 6, 2005 Who are you to lecture me or any of my coworkers on how my company pays us? What do you have to gain by pretending like you are in my shoes? And that's precisely what you did in this thread when you interjected... Please practise what you preach - for ONCE! Link to comment Share on other sites More sharing options...
handyman Posted October 6, 2005 Share Posted October 6, 2005 I would rather take cash or an ESP such as Westjets plan anyday over the typical corporate pension scheme you see at places like AC. A bird in the hand shall we say. As was mentioned above, look at what is happening down south. So don't be so smug Dagger! Link to comment Share on other sites More sharing options...
rudder Posted October 6, 2005 Share Posted October 6, 2005 You might also take note that the solution the PGB is considering is to give companies 25 years to make up pension deficiences, whereas the AC deal is 10 years (with nine years still to go). dagger, That's PBGC. By the way - it's 14 years not 25 and only applies to the NWA and Delta employer sponsored DB plans. That is why AA and CAL are adamantly opposed and lobbying like hell against any pension relief. Amended bill is stalled in the senate and may never see the light of day. Link to comment Share on other sites More sharing options...
Spinnaker Posted October 6, 2005 Share Posted October 6, 2005 I honestly don't understand why you would think the WestJet ESP isn't a good deal Dagger. I've converted stock to lower risk investments all year plus paid my mortgage down by $7000 using WJA stock. A pension does so much less to add to my net worth, why would I want it instead? I fly with more people lately that are concerned about Oil and Gas going down instead of WJA going down. When it hits 5 bucks we'll be losing money. (BTW, E-Handle, did you read the front page of the Calgary Hearld business section?) Link to comment Share on other sites More sharing options...
E-HANDLE Posted October 6, 2005 Share Posted October 6, 2005 Nope, haven't seen it. What's up? Link to comment Share on other sites More sharing options...
handyman Posted October 6, 2005 Share Posted October 6, 2005 I honestly don't understand why you would think the WestJet ESP isn't a good deal Dagger. I've converted stock to lower risk investments all year plus paid my mortgage down by $7000 using WJA stock. A pension does so much less to add to my net worth, why would I want it instead? I fly with more people lately that are concerned about Oil and Gas going down instead of WJA going down. When it hits 5 bucks we'll be losing money. (BTW, E-Handle, did you read the front page of the Calgary Hearld business section?) Honestly, I believe it's just another typical case of blind brand loyalty. No logic, just pure bias that's all. He's with AC so their system is best. Link to comment Share on other sites More sharing options...
E-HANDLE Posted October 6, 2005 Share Posted October 6, 2005 Spinnaker, I just looked at the website. Natural gas at $20?, Mmmmm tasty! Bet you're glad you sprung for that extra insulation! Link to comment Share on other sites More sharing options...
Rockyc Posted October 6, 2005 Share Posted October 6, 2005 dagger, That's PBGC. By the way - it's 14 years not 25 and only applies to the NWA and Delta employer sponsored DB plans. That is why AA and CAL are adamantly opposed and lobbying like hell against any pension relief. Amended bill is stalled in the senate and may never see the light of day. Sorry Rudder, but you are a bit behind the times, newswise. American included in bill on pensions Star-Telegram (Fort Worth, TX) (Thursday, October 6, 2005, p. C1) By John Hughes and Jay Newton-Small, Bloomberg News U.S. senators reached an agreement on airline pension legislation that would extend assistance to two more carriers: American Airlines and Continental Airlines. Sen. Charles Grassley, R-Iowa, said the bill would give Delta Air Lines and Northwest Airlines 14 years to make pension payments otherwise due in a few years. The "leniency" would be extended to Continental and American under the bill, Grassley, chairman of the Senate Finance Committee, told reporters Wednesday in Washington. American executives cheered the news. The Fort Worth-based airline has been pushing for a pension bill that gives relief equally to all carriers, rather than just Delta and Northwest. "We feel like we have something we can live with," said Lisa Bailey, an American spokeswoman. "This is something we've been asking for, and [the bill] resolves our issues." Legislation intended to reform the U.S. pension system, which has cleared two Senate committees, has been stalled in part because Continental and American objected to the Delta-Northwest assistance or wanted similar help. A vote by the full Senate may happen this week, the Senate majority leader, Sen. Bill Frist, R-Tenn., said last week. Bailey said a Senate vote could come as early as Thursday. Link to comment Share on other sites More sharing options...
Guest prob30 Posted October 6, 2005 Share Posted October 6, 2005 Regardless of having 9 yrs left to make up the shortfall, it makes prudent financial sense to retire some of that obligation while times are still good. They got the exemption to attract capital- at the time, that was definitely required. But now that it is clearly NOT required anymore, it is absolutely foolish not to get a head start. Times will not be good for 9 more years; the next cyclical downturn is just around the corner and it will be harder to make up the shortfall when margins are squeezed even further then, than it is now. A special dividend makes ZERO sense for a company that can not guarantee profitability more than a few months at a time! Link to comment Share on other sites More sharing options...
Just Curious 2 Posted October 6, 2005 Share Posted October 6, 2005 The Dagger/ Canada Eh duel aside... It would be nice to see the company try to mend some of the problems it has exacerbated all these years. Cost savings of labour divisions at the negotiating tables really aren't off-set by the bitterness and reduced productivity that results. As well, as has been noted, the sun is shining now, but eventually more rainy days are gonna occur. Link to comment Share on other sites More sharing options...
rudder Posted October 6, 2005 Share Posted October 6, 2005 Sorry Rudder, but you are a bit behind the times, newswise. Really? The situation changes by the minute. The point is that a 25 year amortization has been off the table for weeks. The legislation is still in trouble. My update trumps your update...... http://yahoo.reuters.com/financeQuoteCompa...06184758_newsml Link to comment Share on other sites More sharing options...
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