British Airways yesterday announced that it would maintain current funding for its two main pension schemes.
IAG, the parent company of British Airways, Iberia & Vueling, announced that it would maintain contributions to the Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) at levels set in 2010. Under this agreement, British Airways contributes around £360 million a year into the combined pension schemes.
The main terms of the agreement are:
- A combined technical deficit of £3.3 billion (compared to £3.2 billion at March 31, 2010, which was the basis for the last deficit recovery plan)
- No change to the existing contribution arrangements which were agreed in 2010
- The ability for British Airways to move to normal dividend payments over time.
- British Airways will continue to make additional deficit contributions if its cash balance at March 31 in any year exceeds £2 billion (2010 threshold: £1.8 billion).
The slight increase in deficits between March 2012 and March 2010 is due to a reduction in the interest rates used to discount the schemes’ liabilities, partly offset by other changes including lower pension increases.