Vote threatens to delay company's effort to gain federal approval to defer most of its pension payments for 21 months

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THE CANADIAN PRESS

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TORONTO - In a move that puts the brakes on Air Canada's recovery plans, the cash-strapped airline's biggest bargaining unit has narrowly rejected a management proposal for a pension-funding moratorium.

By a margin of 50.8 per cent, the International Association of Machinists and Aerospace Workers rejected a tentative pact that would have frozen their wages until March 31, 2011. Union spokesman Bill Trbovich says after absorbing a series of pay cuts over the past six years, the workers are upset at the prospect of making more sacrifices.

Trbovich admits the vote threatens to delay Air Canada's effort to gain federal approval to defer most of its pension payments for 21 months.

The IAMAW represents about 10,000 mechanics, electricians, baggage handlers and cargo agents.

Air Canada says it needs immediate pension relief, and is seeking $600 million in loans to survive the recession. One possible option would be to bring back James Farley, a former Ontario judge, to mediate a solution.

In early June, the federal government appointed Farley as the mediator to persuade the airline's five unions to support the company's plan for pension relief.

That plan includes a proposal to skip a $100 million pension payment due on July 30th, another $60 million due Aug. 14, and suspend further contributions until the spring of 2011.