June 18 (Bloomberg) -- Air Canada said the arbitrator in its dispute with the International Association of Machinists and Aerospace Workers union chose the company’s final offer that maintains a defined-benefit pension plan for current employees.
The five-year agreement introduces a multi-employer pension plan for employees hired after yesterday, Canada’s biggest airline said in a statement. It also reduces the pension plan’s deficit and “establishes a protocol for the sustainability of the pension plan.”
The offer selected by arbitrator Michel Picher follows months of labor unrest at Air Canada. Canadian Labor Minister Lisa Raitt blocked a planned lockout of pilots in March, after more than a year of unsuccessful contract talks, by referring it to Picher. Simultaneously, a strike by the Machinists union, which had accused the carrier of doing too little to bolster its pension program, was blocked by the government.
Air Canada’s Class B shares rose 3 percent to C$1.02 at 3:59 p.m. in Toronto, their highest close since Feb. 22.
Peter Fitzpatrick, a spokesman for Air Canada, and Bill Trbovich, a spokesman for the Machinists union, didn’t return voice mails requesting comment.
The agreement is in effect until March 31, 2016. As part of the arbitration process, the union presented Picher with a plan of its own.
The Machinists union represents 8,600 mechanics, baggage handlers and cargo agents employed by Air Canada.
The two sides held negotiations and mediated talks for 14 months, the company said. The arbitration process was legislated under Canada’s Protecting Air Service Act.
Air Canada has been working to regain profitability after four straight annual losses. In May, the carrier posted a first-quarter loss of C$210 million ($205 million), or 76 cents a share, as fuel expenses rose and it booked costs tied to the restructuring of a former maintenance unit.
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