BA deal to cut pension fund deficit – 8 Jan 2007

British Airways has reached a deal with unions to cut its £2.1 billion pension fund deficit following 18 months of talks.

The agreement will allow the airline to push ahead with a £5 billion programme to renew its fleet, but is also likely to encourage potential takeover bids.

City analysts believe BA is a primary takeover target for major financial groups following the buy-out of Australian carrier Qantas in December.

BA has moved considerably from its original proposal to pay £500 million into the fund this year and make annual contributions of £235 million over the next decade.

It will pay £800 million in two payments early this year, followed by annual contributions of £280 million, plus a further £150 million over three years depending on its financial performance.

The carrier has also retreated from demanding lengthy increases in the normal retirement age of pilots and cabin crew.

Chief executive Willie Walsh hailed the deal as “tackling one of the most fundamental issues we face”. Unions will now consult their members on the settlement while recommending acceptance.