MONTREAL - Air Canada (TSX:AC.A) is asking its five unions to allow it to temporarily stop paying down its pension deficits, but union leaders say they're not going to give concessions without a guarantee the savings will improve the long-term health of the troubled airline.

The Canadian Auto Workers, which represents 4,500 Air Canada ticket counter agents and call-centre employees, agreed several years ago to give Air Canada a break in its pension funding obligations when it emerged from bankruptcy protection in 2004.

"What did they do? They threw away more than $2 billion through spinoffs and special dividends, and they paid (former CEO) Robert Milton over $60 million to dismantle the company," CAW president Ken Lewenza said at a press conference Monday.

The CAW's current contract with Air Canada, a six-year agreement negotiated while the airline was under bankruptcy protection, is set to expire at the end of May.

"It's a safe bet that our pensions are going to be the first target of the company," Lewenza said Monday at a CAW press conference.

"The message is: forget it ... our pensions will not be held hostage by the financial meltdown and by corporate greed," he added.

The union also called on the federal government to establish a pension benefit guarantee fund to protect workers' pensions in case Air Canada -- or any other struggling company -- is unable to meet its obligations.

The CAW has made a similar call on the Ontario government regarding the provincially regulated pension plans for General Motors workers, a request the McGuinty government has rejected.

Air Canada said Monday it's asking its unions to approve a moratorium "and other conditions on funding its pension deficit so as to establish financial certainty over the next several years."

Air Canada spokesman Peter Fitzpatrick said he couldn't elaborate on what exactly the company is seeking in negotiations or how long the moratorium would last, but emphasized that Air Canada is "committed" to maintaining its defined benefit plans.

"Over the years we have built up a deficit largely due to the decline in the stock market and low interest rates, so we're looking for a bit of a bridge there," Fitzpatrick said.

The airline's total pension deficit almost tripled in 2008, from $1.2 billion at the beginning of the year to $3.2 billion on Dec. 31.

Air Canada took a contribution holiday from 1997 to 2002 when there was surplus money in the company's main pension plan. Then, under a court-ordered restructuring in 2003 and 2004, the airline's unions agreed to extend the amortization period for its unfunded pension liabilities to 10 years from five.

Andy Wilson, president of the Air Canada Pilots Association, said Monday his union warned Air Canada that it wouldn't have enough money to meet its pension obligations when it spun off many of its assets into a new parent company, ACE Aviation Holdings (TSX:ACE.A), after the airline emerged from bankruptcy protection.

"We said at that time that during the next downturn or the next epidemic, there would be insufficient cash available to meet their pension obligations, and here we are, son of a gun," Wilson said.

"Anyone who'd done a reasonable cash-flow projection would have seen this coming."

Wilson said his union is willing to give Air Canada more time to meet its pension obligations, but said it wouldn't give concessions only to watch the money go to shareholders.

"What we did last time, in 2004, is gave up over $2 billion of concessions only to see those concessions go directly in the pockets of the shareholders," Wilson said.

"We will do what is reasonable for the benefit of Air Canada itself. We are not going to consider cuts that put our retirement incomes at risk just to benefit the shareholders."

The huge drop in stock and bond values used to fund pension payments has created large pension deficits that many companies say they're either unable to overcome or need more time to do so.

And massive pension deficits are a major focus of the restructuring plans at both Chrysler Canada and General Motors Canada, with the latter recording a shortfall of about $4.9 billion in November 2007 -- a number that has unquestionably grown as a result of the financial crisis and slumping global economy.

Air Canada said its objective is to maintain its current defined benefit plans and the current pension benefit formula but to take other steps to correct the funding problem.

The airline recently rehired restructuring expert Calin Rovinescu as its chief executive officer, raising fears that the company is planning to file for bankruptcy protection under the Companies' Creditors Arrangement Act for the second time in six years.

Air Canada sought protection for the first time on April 1, 2003 and spent 18 months under court supervision -- always continuing to fly but frequently at odds with its unions and creditors.