By DPA,
London : British Airways (BA) said Tuesday that it has reached agreement on a plan to cut its massive pension deficit of 3.7 billion pounds ($5.4 billion), which would pave the way for its planned merger with Spain’s Iberia airline.
The embattled British airline said its agreement with pension trustees would avoid the closure of its two company pension schemes, which together serve nearly 100,000 members.
“This plan is a significant and positive step forward for British Airways,” said the airline’s financial officer, Keith Williams.
Under the plan, BA would pay a sum of 330 million pounds a year, rising in line with inflation, until 2023 and 2026 respectively for the two schemes.
BA said it would submit the plans to the pensions regulator by the end of June. Iberia will then have three months to consider it.
The pension recovery programme had been a major sticking point in the merger negotiations with Iberia, which were completed at the end of last year.
Iberia had reserved the right to terminate the agreement unless a satisfactory deal on BA pensions was agreed upon. The merger is due to be completed by the end of 2010.
BA, which has been beset by a series of strikes by cabin staff, reported a record loss of 531 million pounds for the year ending at the end of March 2010.