Airways rallied today after the airline came to an accord with unions on
plans to tackle its £2.1bn pensions deficit.
BA announced the breakthrough, following discussions with representative
groups of four unions which cover pilots, cabin crew, check-in staff and other
In return for the £800m cash boost, which will be paid out of BA’s cash
balances that hit £2.6bn at the end of September 2006, fund members have
accepted a 2.5% cap on future pensionable pay increases. This will provide a
one-off saving of £400m.
Combined, the reforms will cut the pension deficit from an existing £2.1bn to
£900m. BA has also agreed to make annual contributions of £280m a year to its
New Airways Pension Schemes for the next 10 years, as fund members accept other
changes in benefits including a higher retirement age.
BA chief executive Willie Walsh, said: ‘This is great news. Together with the
NAPS trustees and staff, we have found a shared solution that helps secure the
pensions of our 33,500 NAPS members and removes a major blocker to future
investment in British Airways. This brings the NAPS deficit and ongoing
contributions to a level which is affordable by British Airways and effectively
tackles one of the most fundamental issues we face.’
The £800m cash boost will be paid in two installments of £250m this month and
£550m in April in order to glean the greatest amount of tax benefits. The
tax-deductible amount will have a net cost for BA of £560m the
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