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Last Updated: Friday, 29 September 2006, 12:16 GMT 13:16 UK
BA pension deficit to hit 2.1bn
BA aircraft taking off
BA is looking for ways to cut its soaring pension deficit
British Airways has warned that its pension deficit is set to double to 2.1bn ($3.9bn).

Bosses at the airline were meeting union officials to discuss plans to tackle the pensions black hole - which was previously put at 928m.

The widening deficit comes despite BA doubling its contributions and a recent recovery in the stock market.

BA's proposals include raising the retirement age to 65 and capping pay rises to the rate of inflation.

'Fair solution'

The deficit is massive and we must deal with it
Willie Walsh
BA Chief Executive

The airline plans to keep its final salary pension scheme, with no increase in staff contribution rates, and will make a 500m one-off payment if unions agree to new arrangements.

However, GMB national officer Ed Blissett said his union would "not accept raising the retirement age to 65 for those who expect to go at 60".

Separate proposals to manage the pensions fund deficit were being planned, the union said.

BA's chief executive Willie Walsh said the company's proposal was "a fair solution"

"The deficit is massive and we must deal with it. It's one of the biggest challenges we face and I'm determined that we will resolve it," he said.

A report by accountants PricewaterhouseCoopers, commissioned by BA pension fund trustees, has suggested that the airline could afford to pay more than a lump sum of 500m into the pensions deficit.

But the report said BA could not afford annual contributions of more than 240m, well below the amount needed to pay down the deficit for past pensions as well as future needs.




SEE ALSO
Employers reduce pension deficits
28 Jun 06 |  Business
Talks due on BA pension shake-up
26 Apr 06 |  Business
BA investigated on fuel surcharge
22 Jun 06 |  Business
BA pilots prepare for long strike
09 Feb 06 |  Business

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