The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by Sandra Cordon (The Canadian Press) published in the March 26, 2004 edition

Mar. 26, 2004. 12:59 AM

Air Canada pension deal could hit cabinet snag

Finance minister says final decision must be fair to holders of pension rights

By Sandra Cordon
The Canadian Press

Key changes to federal pension law which are pivotal to troubled Air Canada's restructuring may have run into a stumbling block in cabinet.

Finance Minister Ralph Goodale, responsible for the federal pension regulator, warned yesterday that he has several concerns about a plan by the carrier to extend the repayment of its $1.2-billion pension plan shortfall.

Air Canada and its unions have been pressing the Office of the Superintendent of Financial Institutions to seek approval from the federal Liberal cabinet to double the length of time it's allowed to repay that debt to 10 years from five years.

The airline and its unions have struck a deal on that specific pension repayment issue. But a a separate pension dispute over demands by Air Canada's proposed new controlling shareholder to scale back the overall plan threatens to derail the carrier's restructuring.

Goodale, a confidant of Prime Minister Paul Martin, said dealing with the pension repayment issue isn't that simple.

"I would want to make sure that whatever the decision is, that it is absolutely fair to, and respectful of, those who hold pension rights. That is an absolute imperative," he said.

His remarks came the same day that the airline's court-appointed monitor sought an extension to Air Canada's deadline for emerging from bankruptcy-court protection.

The monitor said that soaring fuel prices, the purchase of new regional jets and increased competition have forced Air Canada to revise its business plan.

At the same time, Air Canada chief Robert Milton was preparing to meet with the airline's new controlling investor, Hong Kong businessman Victor Li, over a growing crisis caused by a stalemate in negotiations between Li and the airline's unions over changes to the structure of its pension plans.

Goodale said he's also concerned with the wider implications of extending the pension repayment deadline because it would affect many more companies -- and pension-holders -- beyond Air Canada.

"It's a decision that may have implications beyond one company alone and therefore I need to keep in mind equity (fairness) issues," said Goodale, in some of his first comments on the issue.

Such a proposal hasn't yet officially landed on Goodale's desk, despite the fact it's an important element of the Air Canada restructuring.

Earlier this month, the airline and its union met with OSFI officials but it's still unclear Air Canada will be able to reach an agreement on pension repayments.