British Airways announced a proposal to close a deficit of about £1 billion ($1.7 billion) in its New Airways Pension Scheme, Hounslow, England, said spokeswoman Cathy West. The proposal includes a £500 million contribution, contingent on negotiations with trustees and unions. "There's no timeframe as to when a decision (about the proposal) will be made," Ms. West said.
British Airways, which has pension assets totaling about £10 billion in the NAPS and British Airways Pension Scheme, has one of the largest pension deficits relative to its size, compared with other U.K. companies. Company officials are struggling to find "a solution that will provide competitive, affordable pensions for the future," Chief Executive Willie Walsh said in a prepared statement. "This should address the pension problem at British Airways once and for all," he said.
The proposed £500 million contribution would be added to the £350 million the company already agreed to contribute by Dec. 31, 2006. John Birch, managing director of British Airways Pension Trustees, said trustees have not decided how the new money will be invested, although the NAPS plan is due for a periodic investment review that will take into account any significant cash injections. The review is due to be completed this fall.