Air Canada’s domestic registered defined pension plans are expected to maintain a “significant pension solvency surplus,” according to a press release.

On Monday, the Montreal-headquartered airline withdrew its previously announced first quarter and full year 2020 guidance, as well as its full year 2021 guidance. The ongoing coronavirus crisis means Air Canada “is facing a severe drop in traffic and a corresponding decline in revenue,” noted the release.

“COVID-19 presents the global airline industry with unprecedented challenges, compounded by uncertainty as to the extent of its effects,” said Calin Rovinescu, president and chief executive officer of Air Canada, in the release.

Read: How Air Canada’s pension took off as Canada Post’s plan sank into deficit

“However, we are confident that after a decade of transformation and record results, Air Canada today has the agility, the team and the route network to successfully navigate through this crisis. Most importantly for business continuity, it also has the necessary financial resources, including a solid balance sheet, record liquidity levels, higher debt ratings based on a low leverage ratio and a significant pension plan surplus.”

As of Jan. 1, 2020, the aggregate solvency surplus in Air Canada’s domestic DB plans was $2.6 billion. Total employer funding contributions are projected to be $100 million in 2020, down from $109 million in 2019, with no additional contributions required as a result of changes in interest rates.

“Air Canada has a significantly lower exposure to a decrease in interest rates and reduction in market equity values due to its pension risk mitigation strategy and, as a result, it expects to maintain a significant pension solvency surplus in its domestic registered pension plans for the year,” said the release.

Read: Is Air Canada’s move to enter annuity market the start of a new pension trend?

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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