15th Nov 2006 14:38
British Airways PLC15 November 2006 NAPS DEFICIT FUNDING AGREED British Airways and the trustees of the New Airways Pension Scheme (NAPS) haveagreed in principle a ten year funding plan to tackle its £2.1 billion deficit. The airline will increase its one-off cash injection from £500 to £800 millionand offer to pay up to £50 million a year for the next three years subject tothe airline's year end cash balances remaining above £1.8 billion and on staffaccepting future benefit changes. The agreed funding plan between the company and trustees assumes an increase inBritish Airways' annual contributions to over £250 million and close to thevalue of the proposed members benefit reductions. The benefit reductions include raising the normal retirement age to 65, a loweraccrual rate, inflation capped pensionable pay increases, capped pensionincreases on retirement and sharing life expectancy. NAPS will remain a finalsalary scheme. British Airways' chief financial officer Keith Williams, said: "I am pleased toannounce an agreement in principle with the Trustees on this important issue.This funding plan will secure our past and future pensions. It is the right wayforward for NAPS, our staff and for the company. "The £800 million cash payment into NAPS is a very significant injection intothe fund relative to the company's market capitalization. Together with thebenefits changes, more than half the deficit will be tackled immediately". The airline has been consulting with its trade unions on the proposed benefitchanges and is scheduled to meet them tomorrow (16 November). The trustees arekeen for the company and its trade unions to reach a common understanding. ends November 15, 2006 118/KG/06 Note to editors: • The NAPS actuarial deficit has risen from £928 million in 2003 to £2.1 billion despite a doubling of BA's contributions and a recovery of the stock market. • BA's contribution to NAPS last year was £235 million - the equivalent of five times members' contributions. Without future benefit changes, contributions would have to increase to £497 million per annum. • On advice from Price Waterhouse Coopers, the trustees have said BA could not afford contributions much above current levels and could not use all its cash reserves to pay off all the deficit because it would put the "long term viability of BA in jeopardy". • Under the proposal BA will pay around £250 million by 31 December and £550 million in April next year. The payments are conditional upon acceptance of the proposals. • In addition the company will provide financial guarantees to NAPS of £150 million. These will fall away if the additional payments are made into the fund. • NAPS has 33,794 active members, 20,269 deferred and 15,185 pensioners. • The airline closed NAPS to new members in 2003 but members continue to accrue benefits. • In 2003, the airline introduced British Airways' Retirement Plan (BARP) for new joiners, including chief executive Willie Walsh who joined in May 2005. BARP is a defined contribution scheme. Certain information included in these statements is forward-looking and involvesrisks and uncertainties that could cause actual results to differ materiallyfrom those expressed or implied by the forward looking statements. Forward-looking statements include, without limitation, projections relating toresults of operations and financial conditions and the Company's plans andobjectives for future operations, including, without limitation, discussions ofthe Company's Business Plan programs, expected future revenues, financing plansand expected expenditures and divestments. All forward-looking statements inthis report are based upon information known to the Company on the date of thisreport. The Company undertakes no obligation to publicly update or revise anyforward-looking statement, whether as a result of new information, future eventsor otherwise. It is not reasonably possible to itemize all of the many factors and specificevents that could cause the Company's forward looking statements to be incorrector that could otherwise have a material adverse effect on the future operationsor results of an airline operating in the global economy. Information on somefactors which could result in material difference to the results is available inthe Company's SEC filings, including, without limitation the Company's Report onForm 20-F for the year ended March 2006. Investor Relations Waterside (HCB3) PO Box 365 Harmondsworth UB7 OGB Tel: +44 (0) 20 8738 694 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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