Air Canada 2011 Annual Report Download - page 43

2011 Management’s Discussion and Analysis
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Amendments to the Defined Benefit Pension Plans
In 2011, Air Canada reached an agreement with the Canadian Auto Workers union (“CAW”) Local 2002, which represents
approximately 4,000 call centre and airport check-in and gate agents employed by Air Canada and 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 members, which are subject to regulatory approval and will be
accounted for at the time this approval has been received. In addition, a hybrid pension regime consisting of defined
contribution and defined benefit components applies to new employees represented by the CAW and CUPE, hired after the
date of ratification of the new agreements. The expense and obligations relating to the hybrid pension plan as at December 31,
2011 are negligible.
Pension and Benefits Agreement with Aveos
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. Under the terms of the Pension and Benefits Agreement and subject to regulatory
approval where required, the assets and obligations under the pension, other post-retirement and post-employment benefits
plans pertaining to the transferred unionized employees will be transferred to Aveos.
The terms of the Pension and Benefits Agreement relating to transferred unionized employees provide for the determination
of solvency liabilities and pension assets as at July 14, 2011, in respect of unionized employees transferred to Aveos employed
in the airframe function and, as at October 16, 2007 in respect of unionized employees transferred to Aveos employed in all
other functions.
Air Canada will compensate Aveos for the present value of the accounting liability in respect of other post-retirement and
post-employment liabilities as at July 14, 2011. These compensation amounts will be paid by Air Canada through quarterly
payments to Aveos over a period not exceeding five years after the transfer. Airframe employees represent approximately half
of the approximate 2,200 transferred employees.
Until the Certification Date, the current service pension cost and the current service and interest costs for other employee
benefits, in respect of employees assigned to Aveos, were expensed by Air Canada with a full recovery recorded as an amount
charged to Aveos. From the Certification Date, transferred employees accrue employee benefits in the Aveos defined benefit
plans. Air Canada’s financial statements do not reflect the determination of the solvency liabilities to be transferred to Aveos,
the determination of amount of assets to be transferred to Aveos and the resulting compensation amount to be paid by Air
Canada to Aveos, as these amounts are not yet determined. Based on the January 1, 2011 actuarial valuation, these
compensation amounts are not expected to be material.
9.9. Share Information
The issued and outstanding shares of Air Canada, along with shares potentially issuable, are, as of the dates indicated below,
as follows:
Number of Shares at
January 31, 2012 January 31, 2011
Issued and outstanding shares
Class A variable voting shares 42,271,105 48,424,211
Class B voting shares 235,134,838 230,548,173
Total issued and outstanding shares 277,405,943 278,972,384
Class A variable voting and Class B voting shares potentially issuable
Warrants 89,430,300 89,430,300
Shares held in trust 1,502,542 –
Stock options 6,581,242 3,460,027
Performance share units – 2,500
Total shares potentially issuable 97,514,084 92,892,827
Total outstanding and potentially issuable shares 374,920,027 371,865,211