BA in talks over changes to future scheme benefits

The airline's interim management statement for the nine-months to December 31 - published today - showed BA had made an operating loss of £86m over the period.

But it said the firm had made an operating profit in the final three months of 2009 - largely due to cost reduction measures.

Despite this it said more work needed to be done to reduce costs - and said it was in talks with staff to change future pension benefits

BA's non-operating costs included £150m of net financing expense relating to pensions.

British Airways chief executive Willie Walsh, said: "While we are on the right track, we still expect to make record losses this year. Permanent structural change is being introduced in all areas and will return us to sustained profitability.

"We are working with our staff, their unions and the trustees about solutions to address our £3.7bn pension funds' deficit and are discussing a range of changes to future pension benefits."

This comes after British Airways has reached a provisional deal with trustees over the level of its pension scheme deficits in December (PP Online, December 14).

The company said it had agreed the deficit of the Airways Pension Scheme would be £1bn and that of the New Airways Pension Scheme £2.7bn as of March 31, 2009.

The airline and trustees said it would now work together to develop a recovery plan, which involves British Airways consulting with employees and their trade unions.

The regulatory deadline for the valuation process - which includes an agreement on future contributions and the recovery plan - is June 30 this year.

BA said it is working with actuarial advisers Hewitt Associates and KPMG in conjunction with the schemes' trustees, advised by Watson Wyatt.