Originally Posted by
Antonio8069
AC's competitors face no legacy pension expenses. None. Their time will come (just look at what is happening at United!) but for now they bear zero obligations.
As for limiting exec pay and bonuses, that's a pretty bold move for a Conservative government. Paul Martin would have never interfered with the free market in this way! Kudos to Jim Flaherty for getting this one right!
Actually, the only competitor that still has a pension plan similar to AC's is AA. No other Canadian airline provides a company pension plan for its rank and file employees (WS has profit sharing, not sure how PD handles it). All the other US legacy carriers have been through Chapter 11 and dumped their obligations on a US government agency that takes over such pension plans. If AC had similar pension circumstances as its competitors it would be making a profit for shareholders since it wouldn't have to make contributions.
The real scandal is that AC shareholders have not held senior management to task for their high salaries which are out of line with the size of the airline and in comparison with its competitors. (Same should go for AIMIA/AE whose senior execs make out like bandits.) The feds are correct in reigning in this compensation level until such time as the pension plan is on more stable footing. However, AC is not alone in these short falls. Just about every pension plan is technically unable to meet its obligations because of the financial collapse and now low interest rates.