British Airways: Pension scheme deficits agreed with trustees
14-Dec-2009 British Airways and the trustees of the Airways Pension Scheme ("APS") and the New Airways Pension Scheme ("NAPS") have reached provisional agreement on the actuarial basis to calculate the deficits in each pension scheme as at March 31, 2009.
On the basis of this agreement, the deficit in APS would be £1.0 billion and the deficit in NAPS would be £2.7 billion.
British Airways, working with actuarial advisors Hewitt Associates and KPMG, and the schemes' trustees, advised by Watson Wyatt, have taken extensive independent advice in arriving at this agreement. This includes a thorough assessment of the company's credit status, which is a standard requirement of the funding review, undertaken by PricewaterhouseCoopers ("PwC") on behalf of the trustees.
The airline and trustees will now work together to develop a recovery plan, a process which will involve the company consulting with employees and their trade unions. The regulatory deadline for the valuation process, including agreement on future contributions required and the recovery plan, is June 30, 2010.
Both the valuation and the recovery plan are subject to review and approval by the Pensions Regulator. The Regulator has had only limited information, and has not had the opportunity to carry out a detailed assessment of the assumptions used. The Regulator's provisional view is that the technical provisions may be materially below a level it feels appropriate. The trustees and BA look forward to working with the Regulator to complete a detailed review.
To avoid concerns about any perceived conflict of interest with his role in the Iberia merger, British Airways has asked Roger Maynard to step down as the chairman of trustees of the boards of APS and NAPS to focus on his Iberia role. A replacement will be appointed shortly. British Airways would like to thank Roger for his outstanding contribution and diligence in his role as chairman of trustees over the last five years.