Court extends Air Canada protection to April 15; pension dispute remains
TORONTO (CP) - A bankruptcy-court judge extended Air Canada's protection from creditors Monday until April 15, giving the airline two weeks to resolve a key dispute between its unions and a proposed new investor about the structure of pension plans.
Ontario Superior Court Justice James Farley urged all those involved to "pull together" instead of "pulling apart" - or face the consequences.
"Otherwise, bring your clients and your toothbrushes," said Farley, who joked of locking the lawyers and their clients in jail cells at the courthouse to force a resolution.
Victor Li's Trinity Time Investments said Monday it expects to complete a review of its proposed investment, including specific changes on pensions, by the April 15 deadline.
"For Trinity, the confrontational labour environment is clearly a factor," Trinity lawyer Mark Gelowitz said.
The insolvent airline had said last week it would seek an extension to April 30, but on Monday Air Canada requested an extension only until the middle of the month.
Air Canada sought the shorter period after GE Capital Aviation Services, which is to provide $1.5 billion US in financing and restructure leases on 108 aircraft, said it would need time to consider extending its April 30 deadline for the airline to emerge from creditor protection.
GE Capital wants to see what Trinity plans to do before deciding if it will extend its deadline.
The hearing followed a meeting between Air Canada CEO Robert Milton and Hong Kong businessman Li, seeking to resolve an impasse with unions on proposed changes to the airline's pension plans and update him on the airline's revised business plan.
Li has threatened to walk away with its planned $650-million investment in the airline if the pension changes are not accepted.
The unions argue that they will make no further concessions after surrendering cost cuts worth more than $1 billion a year during negotiations last year in return for pension guarantees.
Trinity wants to minimize Air Canada's future obligations by offering a choice of defined-benefit or defined-contribution pension plans to current employees, while new workers would get a defined-contribution plan.
Compounding Air Canada's problems is a request by the federal pension regulator that the airline revise its payment schedule to cover a $1.2-billion deficit in the pension plan.
Air Canada (TSX:AC), operating under court protection from creditors since last April 1, initially hoped to complete its restructuring by the end of 2003.