Air Canada withdraws challenge of pension deal for service workers

Air Canada is withdrawing its court challenge of a pension deal for its service workers. The company announced its decision in a statement emailed on Tuesday. It wrote that it was more important to create a climate of stability for unions and employees than to challenge the deal.

The pension plan is part of a collective agreement reached over the summer with the Canadian Auto Workers union. Arbitrator Kevin Burkett’s ruling defined a pension plan for new hires in customer services that is part defined benefit and part defined contribution. Air Canada, however, wanted new hires to only have defined contributed plans, in a bid to cut costs.

The company has been trying to cut operating costs for years. It is faced with more competition, rising cost of fuel and an economic slump which all affect its bottom line.

As a result, Air Canada and its 23,000 employees have been on less than amicable terms. It heads into arbitrage with the union representing its 7,000 flight attendants on October 28.