Second BA deal under threat over pension scheme
GLOBAL - Australian airline Quantas today identified problems connected to British Airways' pension fund as one of the "significant matters" that still need to be resolved before a merger with BA can be achieved.
Alan Joyce, the newly-appointed chief executive of Quantas, said in a public speech today there is no guarantee any transaction will be concluded between the two airline companies.
IPE understands concern about pension fund liabilities has also delayed progress on British Airways' proposed tie-up with Spain's Iberia carrier.
"There are a number of significant matters that still need to be resolved, including agreeing an appropriate merger ratio and resolving issues around BA's pension fund and the broader economic outlook," Joyce commented today.
He concluded: "Qantas comes to these negotiations from a position of strength. We will only proceed with this transaction if we are assured that it will maximise value for Qantas shareholders."
News reports this morning stated the trustees of BA's pension fund intend to hold up the proposed merger with Quantas amid fears a deal could threaten the pension scheme's funding shortfall.
British Airways revealed last month the accounting deficit in its New Airways Pension Scheme (NAPS) had increased by another £201m stretching its total deficit to £558m (€690m). (See earlier IPE story: BA admits DB deficit needs longer recovery)
Figures showed the Airways Pension Scheme (APS) had an accounting surplus of just over £1.1bn, of which £307m is recognised on the balance sheet - a £12m increase from March 2008 - while the NAPS reported a deficit of £558m, compared with £357m at the end of the first quarter.
However, the interim report also showed the APS reported a deficit of £245m on an actuarial valuation, and based on figures from March 2008, while the NAPS deficit reported an actuarial deficit of £1.54bn at 31 March 2008.
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