BA threatens 750 jobs in wake of union rejection of pension deal

British Airways is considering making a further 750 people redundant after its three unions rejected its plans to plug the £1bn hole in its pension scheme.

The Transport & General Workers Union, the GMB and Amicus told the airline last week that it was unacceptable to force employees to increase pension payments to make up the shortfall.

A spokesman for the T&G, which has 30,000 BA members, said: "This is BA's problem, not ours. We don't want any changes to the pension scheme."

BA proposed to increase contributions from employees by 3 per cent, which would have raised £21m a year. The company pledged to pay an extra £112m into the pension scheme from its own reserves.

But with the plan in tatters, BA has told the unions that the savings will have to be found elsewhere to make up the shortfall. Job cuts are understood to be to top of the agenda.

BA's pension proposal was part of a wider plan to strip costs of £300m-a-year out of the business. This is expected to lead to a further 4,000 redundancies from BA's 47,000 work force.

One way BA hopes to save money is by offering its staff below-inflation pay rises. The company has proposed a three-year pay deal with a 1 per cent rise the first year and 2 per cent for the following years.

But, again, unions are unimpressed. A spokesman for Amicus said: "We are unhappy with the offer. We want a bigger pay increase which protects members' standards of living."

If the unions formally reject the offer then this could lead to further job cuts to allow BA to meet its target of cutting £300m.

With unions standing firm on pay and pensions and BA sticking to its cost cutting target, the spectre of strike action is looming. One union source, who asked not to be identified, said: "The way things are looking at the moment, I wouldn't bet against it."

A BA spokesman said: "We will continue to fund our pension scheme. The unions' decision on pensions means that the cost savings will have to be found in different ways - productivity increases, a reduction in absenteeism, modest pay increases and a reduction in manpower."