British Airways pilots on Thursday endorsed changes to the airline's pension schemes to help tackle its $5.6 billion pension fund deficit and keep its planned merger with Spanish carrier Iberia on track.
A spokesman for the British Airline Pilots' Association (BALPA), which represents 3000 of BA's 3200 pilots, told Reuters 97 percent of those balloted voted in favour of proposals to increase employees' pension contributions.
BALPA, which said 62 percent of members voted, called the vote to endorse the agreement between trade unions and BA, announced in March.
The agreement said members would increase their contributions to maintain their existing benefits, while keeping BA's payment into the pension fund at 330 million pounds ($487.5 million) a year and avoid the closure of the schemes.
BA's pension deficit could still be a deal breaker in its merger with Iberia because the Spanish carrier has reserved the right to walk away if the UK pensions regulator forces bigger costs on BA than Iberia thinks is affordable.
To implement the changes BA also needs approval from trustees of its two defined benefit pension funds, APS and NAPS, and has to present a recovery plan to the Pensions Regulator by June.
"It is a case of pushing costs down for the company by passing on more of the costs to the members," a separate source, familiar with the pensions negotiations, told Reuters.
The source said the pension funds' investment strategy is not likely to change. "Effectively, it is a squeeze on future benefit to pay for the cost of past benefits," the source said. "It is radical in terms of style -- it throws the problem back to members," he said.
Separately BA said it expects to carry more than 70 percent of its customers a day during five days of strike action due to start next week.
Shares in BA, which have risen 10 percent in 2010, closed 1.7 percent up at 208.5 pence on Thursday, valuing the business at around 2.3 billion pounds. ($1=.6769 Pound)
ReutersLast Mod: 14 Mayıs 2010, 00:44