British Airways admitted yesterday it will have to more than double funding to its pension schemes, which need an extra £133m a year.
The struggling airline said it was in talks with staff and unions about finding "a sensible solution" to the funding problems in its two final-salary schemes, which may mean that staff are asked to help shoulder the additional costs.
BA, whose £2.5bn market capitalisation is dwarfed by its £9bn pension funds, warned its pension costs were set to rise last week when it reported a 53 per cent drop in third-quarter profits. The final-salary plans are closed to new staff.
The triennial valuation of its Airways Pension Scheme (APS) and New Airways Pension Scheme (Naps) revealed the size of the problem yesterday. Naps' deficit has swelled to £928m from £221m and it needs contributions to rise by £107m a year to £225m.
APS still has a surplus, despite a 14-year contributions holiday by BA, but this has slipped to just £45m from £820m in March 2000. It now needs annual contributions of £26m. This will take BA's pension funding requirements from £118m to £251m a year.
John Rishton, BA's finance director, said the group was committed to the schemes but refused to speculate on how the problem would be addressed. "The deficit is mainly due to poor performance of the stock markets and changes in life expectancy," he added.Reuse content