BA starts cutting pension deadweight
21 / 06 / 2010
BRITISH Airways (BA) has agreed to a plan with its unions to try and reduce its bloated £3.7 billion pension deficit, but without having to scrap its two final-salary pension schemes.
The agreement will involve BA continuing its annual contributions of £330 million until 2026 for its New Airways Pension Scheme (NAPS) and until 2023 for its Airways Pension Scheme (APS).
Keith Williams, BA chief financial officer, said: “The trustees understand that the airline is unable to increase its contributions in the current financial climate, but we have agreed a recovery plan that avoids closing the pension schemes, gives NAPS members choice over their future pension accruals, and increases the prudence of the assumptions employed in managing the scheme.”
BA’s pension deficit, aside from being a massive weight for any airline hoping to be an agile company, was a major sticking point in the merger negotiations with Iberia. Now that the agreements have been made, it looks set to meet the ‘pre-nuptial’ targets that Iberia made before their merger.
However, the union Unite is still pushing for further strikes by its BA members – after 22 this year already, at a cost to BA of £150 million – over denied travel perks.