June 15, 2011

Why are we out here?

Going out on strike is not something that any worker takes lightly. CAW members at Air Canada were forced out on strike after negotiations broke down, over demands for major concessions on the pension plan, as well as other issues. After 10 weeks of bargaining, we should have been able to reach a fair and equitable collective agreement. If Air Canada actually wanted to reach one. No-one wants to inconvenience our loyal Air Canada customers. Air Canada workers are customer service professionals and we love our jobs. We want to get back to work but we also need a fair collective agreement. The government has threatened to interfere in the collective bargaining process, taking the side of the company on the pension plan. Federal Labour Minister Lisa Raitt plans to table back-to-work legislation on Thursday, June 16. This legislation, drafted by the Stephen Harper government, may result in significant detrimental changes to our members pension plan. In the meantime, please get in touch with your MP and let them know you want a negotiated settlement! Pension funding concerns AC complains that it has contributed $1.9 billion to the pension plans in the last seven years. It should be no surprise that a defined benefit pension plan for 55,000 active and retired members will have a cost attached to it. For example, CP Rail, which covers a smaller number of plan members, voluntarily contributed an additional $1 billion last year to their pension plan to ensure secure funding for their plan members. From 2001-2003 Air Canada took contribution holidays where they did not pay into to the plan (until the regulator stepped in). In the 2004 CCAA proceedings Air Canada received regulatory approval for reduced funding until January 2014. When AC could not meet these payments in 2009, Air Canada was given a 21month moratorium on pension funding, agreed to by the unions.

Air Canada now has special funding relief on the pension plan until 2014. By 2014, Air Canada could have a $2.5 billion pension shortfall which will have to be funded over five years. Air Canada has already told the unions that they will not be able to make the payments. Air Canada also demanded further cuts at the bargaining table Only six hours before the June 13 deadline, Air Canada demanded greater cuts in pensions and put an entirely new proposal to the union, including the defined contribution pension plan for new hires.

Air Canada demands include: o a change in the benefit formula which would mean a 20% cut in the benefit o the age for unreduced early retirement to be age 60 o Caps on the number of unreduced retirements in each year o a significant reduction in the joint and survivor benefit And AC insists on a defined contribution plan for new hires. Workers coming in at $11.23 an hour will have to work 10 years to reach the maximum rate for the job classification. After contributions to the pension plan, new hires currently earn a wage of only $10.60 an hour, close to minimum wage.

Meanwhile Air Canada CEO Calin Rovinescu gets to keep his defined benefit pension plan, set to pay him in retirement $351,000 per year in addition to a 76% pay hike that landed him $4.55 million in compensation last year, plus a $5 million retention bonus. Our members want a secure pension. We want the corporation to be a viable operation. The CAW made a reasonable pension proposal to AC to address the pension shortfall Our proposal means a 22% reduction in liabilities that the company has to fund.
The CAW proposal, if applied across the AC pension plans, would reduce ACs

current solvency shortfall from $2.7 billion1 to $1.6 billon.

Air Canada CFO Mike Rousseau told the unions in August 2010 that AC could

accept a solvency shortfall of $1.5 billion. We have it in writing. We want to protect our members right to retire with the pension they were promised Our proposal protects the right to an unreduced pension at age 55 (with 25 years of service). Members who terminate or retire prior to age 55 would have a significant cut in their pensions. Maintain the defined benefit pension plan for new hires.

Why is the union protecting the defined benefit plan for new hires? Our members fought for a decent pension plan over the years. We want to ensure a decent pension for the next generation of workers. Two standards of pensions one poor pension for new hires and decent pension for current employees breaks solidarity among union members. When the defined benefit pension plan is closed off to new hires, the defined benefit pension is left with retirees and a senior workforce. The financial health of the plan is in jeopardy.

The Air Canada pension shortfall has actually improved from $2.7 billion in January 2010 to $2.1 billion in January 2011.