British Airways announced today (June 22) that it had reached agreement on a recovery plan for its two pension schemes
The deal should clear the last major obstacle to the airline's merger with Iberia, the Spanish national carrier.
In a statement BA said agreement had been reached with the trustees of its New Airways Pension Scheme (NAPS) and Airways Pension Scheme (APS).
It said the deal avoids having to close either plan and maintains the airline's annual contribution of £330m.
The carrier will also continue its agreed deficit payments for NAPS until 2026 and for APS until 2023.
BA will make increased deficit payments if its year-end cash balance exceeds £1.8bn.
The airline posted a pre-tax loss of £531m for the year ending March 31 last month.
The recovery plan will now be submitted to the UK Pensions Regulator by the end of this month.
BA said that under its merger plan with Iberia, the Spanish carrier could call off the deal if it felt the pension recovery plan was not "satisfactory because it would be materially detrimental to the economic premises of the proposed merger."
Iberia has three months to reach its decision.
Keith Williams, BA's chief financial officer, said: "This agreement is a significant and positive step forward for British Airways and the pension scheme members.
"The trustees understand that the airline is unable to increase its contributions in the current financial climate but we have agreed a recovery plan that avoids closing the pension schemes, gives NAPS members choice over their future pension accruals, and increases the prudence of the assumptions employed in managing the scheme.
"The Pensions Regulator's initial response to the overall package has been positive.
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