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Ottawa, May 21, 2004
2004-037

Minister of Finance Supports Regulatory Change on Air Canada Pension Deficiency

Minister of Finance Ralph Goodale today announced he is recommending Cabinet support the regulatory change put forward by the Office of the Superintendent of Financial Institutions (OSFI) to provide pension funding relief to Air Canada.

“The Superintendent of Financial Institutions has indicated to me that the agreement reached with Air Canada represents the best balance between protection for plan beneficiaries and Air Canada’s need to emerge from protection under the Companies’ Creditors Arrangement Act (CCAA),” Minister Goodale said.

The regulatory amendment will be subject to the regular approval process, including publication in the Canada Gazette, Part I, and a period of public comment.

The Minister added that the Government would continue to monitor the consultation process that will be carried out by representatives of the unions and retiree groups. It is important that pension plan beneficiaries support the proposal put forward by Air Canada and their representatives, since it is their pension benefits that will potentially be affected by this regulatory change.

As noted in the agreement, implementation is conditional upon (i) consent being obtained from plan beneficiaries through the unions and court-appointed representatives of non-unionized employees and retirees, (ii) the amended regulations coming into effect, and (iii) CCAA emergence on or prior to December 31, 2004.

“While the regulatory change would only deal with the situation at Air Canada, I have asked the Department of Finance and the OSFI to bring forward proposals to apply this type of funding flexibility more broadly to other companies under the protection of the CCAA or the Bankruptcy and Insolvency Act,” the Minister said. He noted this type of relief is available in other jurisdictions, including the United States and the United Kingdom.

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