Air Canada 2012 Annual Report Download - page 110

2012 Air Canada Annual Report
110
9. PENSIONS AND OTHER BENEFIT LIABILITIES
The Corporation maintains several defined benefit and defined contribution plans providing pension, other post-retirement
and post-employment benefits to its employees, and former employees for whom the related pension assets and liabilities
have not yet been settled.
The Corporation is the administrator and sponsoring employer of ten Domestic Registered Plans ("Domestic Registered Plans")
with defined benefit commitments registered under the Pension Benefits Standard Act, 1985 (Canada). The US plan, UK plan
and Japan plan are international plans covering employees in those countries. In addition, the Corporation maintains a number
of supplementary pension plans which are not registered. The defined benefit pension plans provide benefits upon retirement,
termination or death based on the member's years of service and final average earnings for a specified period.
The other employee benefits include health, life and disability. These benefits consist of both post-employment and post-
retirement benefits. The post-employment benefits relate to disability benefits available to eligible active employees, while
the post-retirement benefits are comprised of health care and life insurance benefits available to eligible retired employees.
Amendments to the Defined Benefit Pension Plans
In June 2012, Air Canada and the International Association of Machinists and Aerospace Workers (“IAMAW”) received the
decision of the arbitrator in the final offer selection arbitration conducted in accordance with the process legislated by the
federal government in the Protecting Air Service Act. The arbitrator’s final offer selection concludes a new five-year collective
agreement with the IAMAW which is in effect until March 31, 2016. The new collective agreement preserves defined benefit
pension plans for current employees and introduces a new IAMAW multi-employer pension plan to which, subject to certain
conditions, Air Canada will become a party, for new employees hired after the date of the decision. This new IAMAW multi-
employer pension plan will be accounted for as a defined contribution plan as the Corporation’s contributions are limited to
the amount determined in accordance with the new collective agreement. The collective agreement also includes
amendments to the defined benefit pension plans of current IAMAW members which are subject to regulatory approval by
OSFI and will be accounted for at the time this approval is received.
On July 30, 2012, Air Canada and the Air Canada Pilots Association (“ACPA”) received the decision of the arbitrator in the final
offer selection arbitration conducted in accordance with the Protecting Air Service Act. The arbitrator's final offer selection
concludes a new five-year collective agreement with ACPA which is in effect until April 1, 2016. This new collective
agreement preserves defined benefit pension plans for current employees and introduces a defined contribution pension plan
for new employees hired after July 30, 2012. The collective agreement also includes amendments to the defined benefit
pension plans of current ACPA members which are subject to regulatory approval by OSFI and will be accounted for at the
time this approval is received. In addition, the new ACPA collective agreement contemplates pilots working past age 60, which
was the age of mandatory retirement in the previous collective agreement. As a result of these changes to retirement age,
which are not subject to regulatory approval, the Corporation has recorded a credit of $124 in Benefit plan amendments in
2012 related to the impact of those amendments on pension and other employee benefit liabilities. By virtue of its size and
incidence, this item is separately disclosed within the consolidated statement of operations.
In 2012, Air Canada concluded agreements with the Canadian Auto Workers union (“CAW”) in respect of Crew Schedulers and
with the Canadian Airline Dispatchers Association (“CALDA”). The new collective agreements include amendments to the
defined benefit pension plans of Crew Schedulers and CALDA members which are subject to regulatory approval and will be
accounted for at the time this approval is received. In addition, a hybrid pension regime consisting of a defined contribution
and a defined benefit plan applies to new Crew Schedulers employees hired after the date of ratification of the new
agreements. For CALDA employees, the new pension arrangement for new hires is a defined contribution plan.
In 2011, collective agreements were concluded and ratified and/or conclusively settled through arbitration, with the CAW in
respect of approximately 4,000 call centre and airport check-in and gate agents employed by Air Canada and with the
Canadian Union of Public Employees (“CUPE”), the union representing the airline’s 6,800 flight attendants. The agreements
include amendments to the defined benefit pension plans of CAW and CUPE represented plan members which are subject to
regulatory approval and will be accounted for at the time this approval is received. In addition, a hybrid pension regime
consisting of a defined contribution and a defined benefit plan applies to new employees represented by the CAW and CUPE,
hired after the date of ratification, for CAW, and the coming into force, for CUPE, of the new agreements.