UK - British Airways "may not survive" unless unions agree to share the pensions burden, trustee chairman Mervyn Walker warns.
Walker is chairman of the £6bn Airways Pension Scheme and the £4bn New Airways Pension Scheme which have discontinuance deficits totalling £3.6bn. This dwarfs BA’s market capitalisation of £2.4bn.
BA has increased its employer contributions from £133m to £251m a year. It also proposed increasing employee contributions from 5.25 % of pay to 8.25% and reducing benefit accrual rates.
But Walker said the Transport & General Workers’ Union and GMB had refused to consider either proposal.
He warned that the unions must change their stance if BA – which has struggled to cope with falling passenger numbers since the terror attacks of September 11, 2001, competition from low cost carriers and rising fuel costs – is to survive.
Walker said: “We have to keep up our efforts in persuading people to share the risks. BA cannot avoid the reality that we are in a fiercely competitive industry and unless we respond to the short-term problems now, you’ve got to question whether legacy airlines like British Airways will still be around.”
However, a T&G spokesman said: “Our members have made their contributions [to the consultation process]. If there’s a deficit, that is BA’s problem to resolve.”
Aon head of professional practice Donald Duval said: “For the majority of British companies, pensions are a serious problem but they are not terminal.
“But household name companies go down for a variety of reasons, and it is possible for a scheme to take a company down.”
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