British Airways, Harmondsworth, England, increased to £450 million ($577 billion) the fixed contribution the company is paying into the New Airways Pension Scheme and shortened the length of the fund's recovery plan to 2023, according to Steve Gunning, chief financial officer of International Airlines Group, parent company of BA.
Following an improvement in the funded status to 87.3% in 2018 from 82.7% in 2015, the British airline announced that starting in April 2020 it will make a higher fixed annual contributions to tackle the £2.4 billion funding gap in the £16.9 billion fund.
Under the original recovery plan set to end in March 2027, the airline was to contribute each year a fixed amount of £300 million and up to £150 million in variable cash contributions. Contributions were aimed at reducing a then-£2.8 billion funding gap.
However, Mr. Gunning said in the Oct. 25 statement that British Airways will be making a one-off payment of £250 million in 2019 as part of the settlement related to Airways Pension Scheme, which is still pending approval from U.K.'s High Court. Under the terms of the proposed settlement, the trustee will be able to award discretionary increases so that pension benefits will be increased in line with annual increases to the retail price index.
Under the new recovery plan, according to the statement, contributions will be suspended if the deficit is gone before 2023 but will be resumed if the funded status falls again below 100%.