British Airways pension costs to rise by E190m
UK – British Airways has completed its actuarial review of its two main pension schemes – ad found that its annual pension contributions would have to rise by 133 million pounds (190 million euros).
“The latest actuarial valuation, calculated every three years to determine the funding position of British Airways' two main UK pension schemes – Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS) - has been completed,” BA said.
It said that the scheme actuary, Watson Wyatt, has determined that annual contributions of 26 million pounds for APS are required from November 2003. “For NAPS, contributions will increase by 107million pounds a year to 225 million pounds effective January 2004.”
Standard & Poor's Ratings Services said that its BB+/Stable/-- ratings on BA were not affected by the announcement.
“The additional cash contribution required is material, but should be satisfactorily covered by the group's cash generation.”
The APS surplus had fallen from 820 million pounds at the last valuation in March 2000 to 45 million pounds. The NAPS deficit had risen from 221 million pounds to 928 million pounds. “The government minimum funding requirement is covered in both schemes,” BA added.
Chief financial officer John Rishton said: “he deficit is mainly due to the poor performance of stockmarkets in the last three years and changes in life expectancy.”
“British Airways remains committed to its existing pension schemes but these funding increases are a substantial additional burden, particularly in the current difficult trading environment. We will be working with our unions and staff to find a sensible solution.”
Both schemes are closed to new members. BA introduced a defined contribution scheme for new staff in April this year.
APS and NAPS together have combined assets of around nine billion pounds.