Air Canada Allowed To Pay Debts Later But With Stricter Conditions

This article was last updated on April 16, 2022

Canada: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…

The federal government made a considerate announcement on Tuesday, declaring that it will be extending the period allow to Air Canada for overcoming its $4.2-billion deficit in its pension plan, while also emplacing stricter rules on the airline company to  limit its executive pay and prevent it from paying dividends.

Finance Minister, Jim Flaherty, stated during the announcement that “by taking this action, we are ensuring that Air Canada remains viable, that thousands of jobs are protected and the service is there when Canadians need it.” He added that “Air Canada is the country’s largest airline and contributes significantly to the Canadian economy.” The deal obligates the airline company to make contributions to the plan of at least $150 million a year totaling at least $1.4 billion over seven years, i.e. in addition to the standard contributions required by the plan. Additionally, the agreement freezes any forthcoming increases in executive pay at the rate of inflation, while also prohibiting distribution of any special bonuses and limiting the executives’ incentive plans.

Moreover, the airline will also be compelled from paying any dividends or buying back stock as well as making any pension plan benefit improvements without regulatory approval. Flaherty pointed out that Air Canada’s unions and retirees are very much supportive of the company’s request for help with its pension deficit. The minister alleged that “this regulatory change is not costing Canadian taxpayers a single dollar, but it is providing Air Canada time to pay off the sizeable pension deficit.”