Growing tension over BA’s pensions deficit; calls bankruptcy idea ‘ludicrous’

Growing tension over BA’s pensions deficit; calls bankruptcy idea ‘ludicrous’

	Published : Sun, 15 Jan 2006 02:05 By : Andrew Stead Print this Story

LONDON: The growing apprehension of British Airways’ pilots over its £1.4bn pensions deficit has prompted an actuary to suggest the carrier should declare itself bankrupt. The airline dismissed the suggestion as “the most ludicrous proposal imaginable”.

In recent months, BA’s pilots have been uncertain about the future of their employer. Through their in-house newspaper the airline has been informing its employees about the huge pensions deficit that the management was concerned about.

The airline is expected to suggest changes to the scheme in the coming months, which, the pilots union warns, will be radical and unacceptable. The union British Airline Pilots Association (BALPA) represents 2,800 of BA’s 3000 pilots. It wrote to each of its members that BA is currently on a massive communications campaign to inform its employees about the seriousness of the pensions situation. The future of the pilots’ pensions “is precarious” and that the airline is planning to announce major changes. BA pilots might have to forsake more than one third of their pension entitlement, the letter warned.

The letter referred to a statement by BA’s chief executive Willie Walsh during an interview published in BA’s in-house house journal. Walsh said that the airline would discuss the deficit problem with New Airways pensions Scheme (NAPS) members.

The airline wants its pilots to pay for the deficit in the final salary pension scheme, the union believes, and said it would counter any such move with industrial action. It will not allow the airline to make the pilots surrender any of their pension rights. The airline must “honour’ its commitment to pay towards the final salary scheme and not expect a bigger contribution from the pilots, BALPA said.

Meanwhile, the airline responded by saying it found BALPA was being “unprofessional and unhelpful” at this time when no proposals have been put forward nor have they begun any talks with the union.

To the actuary’s proposal that BA file for bankruptcy, the airline said it “is not an option under consideration”. The airline said it was one of the world’s most profitable airlines with a cash flow of nearly £2bn and first-half operating profits at £437m.