Air Canada 2012 Annual Report Download - page 46

2012 Air Canada Annual Report
46
In June 2012, Air Canada and 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 the 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 Air Canada’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 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. As disclosed above, 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, as disclosed above, Air Canada recorded an operating expense reduction of $124 million in
Benefit plan amendments in the third quarter of 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 on Air Canada’s consolidated
statement of operations.
In 2012, Air Canada concluded agreements with the CAW in respect of crew schedulers and with the Canadian Airline
Dispatchers Association (“CALDA”). The new collective agreements also 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 June 2012, Air Canada also concluded an agreement with Aimia Canada Inc. (formerly Aeroplan) through which Air Canada
will transfer to the Aeroplan defined benefit pension plan all the pension plan assets and obligations related to pension
benefits accrued by CAW-represented employees who were Air Canada employees and who chose to transition to
employment at Aeroplan in 2009. The transfer is subject to the approval of OSFI but the 2012 actuarial valuations assume
that the transfer has been made. Based on the most recent actuarial valuation report, the solvency deficit and related
compensation for transferred employees is not material.
Pension and Benefits Agreement with Aveos
On June 22, 2007, Air Canada and Aveos entered into 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 provided that, subject to
regulatory approval by OSFI, where required, the assets and obligations under the pension, other post-retirement and post-
employment benefits plans pertaining to the transferred unionized employees would be transferred to Aveos, with Air Canada
providing compensation payments to be paid quarterly to Aveos over a period not exceeding five years once determined after
the transfer. In 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 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 Air Canada’s consolidated financial
statements but their final determination may be subject to Aveos’ CCAA proceedings.