Shares in British Airways have risen in early Monday trading after the carrier reached a deal with its four main trade unions on plans to tackle its 2.1 billion pound ($4.1 billion) pension deficit.
The deal, struck late on Friday, was recommended by the unions after months of negotiations and should lift the threat of industrial action at the airline.
Full press statement
British Airways today (January 5, 2007) welcomed the decision by its trade unions in the BA Forum to recommend changes to its New Airways Pension Scheme (NAPS), which has a £2.1 billion deficit.
The British Airways Forum represents the airline’s four unions and is recommending acceptance of the proposal and will now consult with members formally.
The company has agreed to make a one off contribution of £800 million into the fund subject to acceptance of benefit changes. T
ogether with a one-off employee saving of £400 million and changes to future benefits, the NAPS pension deficit will be reduced by more than half from an existing £2.1billion to £0.9 billion and the company’s annual contributions will be around £280 million a year for the next ten years.
British Airways’ 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.”
A funding plan to clear the NAPS deficit over 10 years was agreed with the pension scheme trustees in 2006, subject to members accepting changes to future benefits.