Air Canada 2012 Annual Report Download - page 143

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2012 Consolidated Financial Statements and Notes
143
Pension and Benefits Agreement
As described in Note 9, Air Canada and Aveos are parties to a Pension and Benefits Agreement covering the transfer of certain
pension and benefit assets and obligations to Aveos. On July 14, 2011 (the “Certification Date”), certain unionized employees
of Air Canada elected to become employees of Aveos. The Pension and Benefits Agreement provides that, subject to
regulatory approval by the Office of the Superintendent of Financial Institutions (“OSFI”), where required, assets and
obligations under the pension, other post-retirement and post-employment benefits plans pertaining to the transferred
unionized employees are to be transferred to Aveos, with Air Canada to provide compensation payments to be paid quarterly
to Aveos over a period not exceeding five years once determined after the transfer. As part of the arrangements, a letter of
credit in the amount of $20 was issued by Air Canada in favour of Aveos to secure the payment of all compensation payments
owing by Air Canada to Aveos in respect of pension, disability, and retiree liabilities for which Air Canada would be liable
under the Pension and Benefits Agreement. This amount is recorded in Deposits and other assets.
During 2012, OSFI ordered the termination of Aveos’ defined benefit pension plans and, as a result, the assets and liabilities
accruing prior to the Certification Date in respect of transferred employees will not be transferred to Aveos’ plans and will
remain under Air Canada’s pension plans. In addition, obligations under the other post-retirement and post-employment
benefits plans pertaining to the transferred unionized employees, for accounting purposes, continue to be included in these
financial statements, but their final determination may be subject to Aveos’ CCAA proceedings.
In light of the uncertainty relating to Aveos’ CCAA filing, no final determination as to the impact of Aveos’ CCAA filing on
transfers and compensation amounts, if any, between Air Canada and Aveos has been made, and the ultimate settlement of
such amounts may be dependent on resolution by the court process under Aveos’ CCAA proceedings.