BA 'could sell Air Miles to fund £1.8bn pensions shortfall'

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British Airways is mulling the sale of its Air Miles customer loyalty scheme to help fill a pensions deficit that could be twice as big as first thought, according to reports at the weekend.

The shortfall in its retirement fund has almost doubled to nearly £1.8bn, according to new valuation being carried out by actuaries, one said. It is understood that Watson Wyatt have revised an initial estimate of £928m to just under £1.8bn in a move that could force the airline to inject more cash into the fund.

Last week BA confirmed plans to pay £350m into its final salary scheme, which it shut to new members in 2003. It has offered to inject a further £500m in return for concessions from workers on retirement ages.

One report said Watson Wyatt had already presented a first draft to pension fund trustees and head of a meeting with the company this week.

BA said that a sale of Air Miles was one of the options being considered for the scheme that it bought in the 1990s. It declined to comment on reports that private equity firm European Capital had agreed to pay £25m for the scheme in a complex transaction that would allow BA to take up to £200m out of the company and provide flights in return.