The Canadian federal government assigned a mediator to ongoing talks between Air Canada and the Canadian Auto Workers (CAW), which represents nearly 5,000 of the carrier's employees.
Former Ontario Superior Court Justice James Farley, who oversaw Air Canada's formal restructuring in 2003, will work with both parties to address pension issues as the current collective agreement between the parties expired on 31 May. "With the appointment today of the Honourable James Farley, we are hopeful of a rapid resolution of the pension funding issue as well as achieving labour stability, both of which are pre-conditions required to help the company obtain the financing needed to address the company's liquidity constraints," Air Canada president and CEO Calin Rovinescu says in a statement.
The appointment surprised the union because CAW and liquidity-challenged Air Canada have been in negotiations for the past two weeks and the union thought talks were progressing, a CAW spokeswoman says.
The union seeks to retain its defined benefits pension at the same time that Air Canada and other Canadian corporations lobby the government for pension reform as pension plans are subject to federal regulation.
"It's important to recognize though that funding relief for the pension plan will not alone solve the airline's financial troubles," Peggy Nash, assistant to the CAW president, says in a statement.
The union has also been pushing for the government to take a stake in Air Canada as the carrier attempts to restructure to withstand effects of the global economic downturn.
Air Canada's pension deficit has reached C$3.2 billion. The carrier also has roughly C$660 million in debt maturing during the next six-to-12 months.