BA agrees pension plan ahead of merger

The embattled airline said its agreement with pension trustees would avoid closure of the two final salary company pension schemes – which together have nearly 100,000 members.

It aims to pay 330m a year, rising in line with inflation, until 2023 and 2026 for the two schemes to plug a gaping 3.7bn deficit.

But members will have to either pay more to maintain the same benefits, or see their pension pots reduce. BA will submit the plans to the Pensions Regulator by the end of June and Iberia now has three months to consider the pensions deal.

The pension recovery programme had been a major sticking point in the Iberia merger and Iberia still has the option to call off the tie-up if it does not agree with the arrangement struck with trustees.

BA struck an agreement in March with trade unions on the pension changes, which will see members accept a reduction in benefits.

However, those in the larger of the two schemes – the 68,800-strong New Airways Pension Scheme (Naps) – can pay 4.5 per cent more in contributions to maintain existing benefits.

The Naps scheme has a deficit of about 2.7bn, while the Airways Pension Scheme (Aps) – with 31,000 members – is some 1bn in the red. They are both closed to new members.