British Airways reaches pension deal with unions

British Airways Plc (BAY.L: Quote) has reached an agreement with its four main trade unions on a package of reforms to tackle its 2.1 billion pound ($4.1 billion) pension deficit, the airline confirmed on Saturday.

The deal, struck late on Friday, will be recommended by the unions to the workforce to end months of negotiations and should lift the threat of industrial action at the airline.

BA has agreed to make a one-off contribution of 800 million pounds into the pension fund subject to acceptance of benefit changes.

The airline said together with a one-off employee saving of 400 million pounds and changes to future benefits, the New Airways Pension Scheme (NAPS) pension deficit will be reduced by more than half to 900 million pounds.

Its annual contributions will be around 280 million pounds for the next decade.

"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," BA Chief Executive Willie Walsh said in an emailed statement.

"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," Walsh said.

Further details of the proposed pension arrangements will be released following communications to employees on Monday, BA said.

It agreed a funding plan to clear the NAPS deficit with the pension scheme trustees in 2006, subject to members accepting changes to future benefits.

BA said in November it had agreed to make a one-off injection of 800 million pounds and pay up to 50 million pounds a year for three years to tackle its pension deficit, but still had to negotiate the deal with unions.

The airline last year proposed raising the retirement age of its 2,500 pilots to 60 from 55 and raise the retirement age for other staff to 65. [via]