BA agrees pensions plan, paving way for Iberia merger
British Airways said on Tuesday said it had agreed a recovery plan to address its employees' pension deficit, bringing the airline closer to completing its planned merger with Spanish airline Iberia.
BA said it would plug a pensions deficit of 3.7 billion pounds (4.44 billion euros, 5.44 billion dollars) by setting aside at least 330 million pounds a year until 2026.
BA will submit the plans to Britain's pensions regulator by the end of June, while Iberia has been handed three months to consider the proposal.
The pensions deficit had been a major sticking point in BA's agreed merger and Iberia still has the option to call off the tie-up if it does not agree with the arrangement struck between BA management and trustees.
"British Airways has reached agreement with the trustees of its New Airways Pension Scheme (NAPS) and Airways Pension Scheme (APS) on a recovery plan to address its pension deficits," the airline said in a statement.
BA and Iberia signed a merger deal on April 8 to create one of the world's biggest airlines in order to compete more effectively in the fast-consolidating industry.
The tie-up will create Europe's second-biggest airline by market value after Lufthansa, combining Iberia's strong position in Latin America with BA's presence in Africa, Asia and North America.
The merger, which requires regulatory and shareholder approvals, is on track for completion later this year.
© 2010 AFP