CANADA - Air Canada has raised more than C$1bn (US$937) in order to meet requirements for its recently amended pension and work arrangements.
The airline said in a statement that it has entered into arrangements through a series of financings with certain lenders and key stakeholders and has managed to raise more than the required $600m in new financing in order for recently ratified pension arrangements to be implemented.
The revised pension arrangements, which allows for a 21-month funding moratorium, were ratified by all five of the airline's Canada-based unions, while a consultation process with retirees, managers, as well as administrative, technical and support staff was also completed on July 19 (Global Pensions; July 20, 2009).
A regulation was also passed last week, which amended the airline's pension funding obligations to allow for the moratorium on past service contributions followed by fixed payments for the 2011-2013 period (Global Pensions; July 27, 2009).
Air Canada president and chief executive Calin Rovinescu said: "The $1 billion of new liquidity will give us breathing room towards achieving sustainable profitability. This will require a fundamental repositioning of the airline with a focus on both cost management and a new approach to revenue generation to offset the dramatic erosion in yield."
The initial $600 million to be drawn under this agreement is repayable from August 1 2010 next year. As part of the transactions under the Agreement, Air Canada will issue to the lenders warrants for the purchase of some of Air Canada's class voting shares representing an aggregate of five percent of the total issued and outstanding shares.
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