BA pension deal clears way for merger
Source: Agencies |
June 23, 2010, Wednesday
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BRITISH Airways said yesterday it has reached an agreement with pension trustees on a plan to close deficits, a deal designed to resolve a key issue in a proposed merger with Spanish airline Iberia.
BA said its annual contributions to the two pension plans would continue at 330 million pounds (US$487 million) a year, plus increases of about 3 percent a year.
BA said it will make additional contributions if its year-end cash balance is over 1.8 billion pounds, and it has made additional provisions of 250 million pounds for securing pensions if it becomes insolvent.
All contributions into the BA pension funds will continue to be funded by BA and will not be funded by Iberia or the merged holding company, International Airlines Group, BA said.
The pension issue was a sticking point in negotiations with Iberia, which can still call off the merger if it is unhappy with the pension deal. The pension agreement also is subject to regulatory approval.
BA and Iberia hope to complete the merger this year, the companies said in April when they signed the merger agreement. The combination would be Europe's third-largest airline.
BA is losing money, and is locked in a protracted dispute with the cabin crew union over other issues including working practices and travel benefits. "This (pension) agreement is a significant and positive step forward for British Airways and the pension scheme members," said Keith Williams, British Airways' chief financial officer.
BA said its annual contributions to the two pension plans would continue at 330 million pounds (US$487 million) a year, plus increases of about 3 percent a year.
BA said it will make additional contributions if its year-end cash balance is over 1.8 billion pounds, and it has made additional provisions of 250 million pounds for securing pensions if it becomes insolvent.
All contributions into the BA pension funds will continue to be funded by BA and will not be funded by Iberia or the merged holding company, International Airlines Group, BA said.
The pension issue was a sticking point in negotiations with Iberia, which can still call off the merger if it is unhappy with the pension deal. The pension agreement also is subject to regulatory approval.
BA and Iberia hope to complete the merger this year, the companies said in April when they signed the merger agreement. The combination would be Europe's third-largest airline.
BA is losing money, and is locked in a protracted dispute with the cabin crew union over other issues including working practices and travel benefits. "This (pension) agreement is a significant and positive step forward for British Airways and the pension scheme members," said Keith Williams, British Airways' chief financial officer.
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