David Prosser: Strike one for BA in battle with unions


Outlook British Airways may not have reached a deal with cabin crew staff to prevent this weekend's strikes, but it did manage yesterday to come to an agreement with unions over the separate matter of pension contributions. And in the longer term, this is an accord that may prove much more significant for the airline's chances of survival.

All three of BA's main unions have said they will recommend to members a deal that will require staff contributing to the airline's two final salary pension schemes to increase what they pay into the plan if they want to continue qualifying for the same levels of benefits.

There will be staff who baulk at such a demand, but BA has, in fact, been much more generous on pensions than many other employers. It was late to join the trend to close its final salary scheme to new joiners and it is not following the lead of the increasingly large number of employers that are also shutting such plans for existing members.

Given the £3.7bn deficit in BA's pension schemes, some kind of compromise with staff had to be achieved. Indeed, the agreement outlining the airline's potentially transformational merger with Iberia gives the Spanish airline the right to walk away from the deal should BA find itself unable to come to an agreement with the Pensions Regulator on how it reduces the shortfall.

Yesterday's deal then, assuming the unions are able to sell it to their members, could remove the only potential stumbling block for the Iberia merger. So while the arrangement was overshadowed by the continuing argy-bargy with cabin crew, BA's management will have been quietly delighted to pull it off.

No rest for the wicked though. There's a strike to plan for, after all.

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