Spanish airline backs BA pension plan ahead of merger

Spanish airline backs BA pension plan ahead of merger

The merger between British Airways and Iberia moved a step closer today after the Spanish airline approved BA’s plan to deal with a £3.7bn (€4.33bn) pension deficit.

Iberia had the right to pull out of the deal between the two airlines if it thought the outcome of discussions between BA and its pension trustees could damage the value of the merger.

But in a statement, BA said Iberia’s board of directors had chosen “not to exercise its right to terminate the merger agreement”.

BA agreed a recovery plan in June for its underfunded pension schemes, which it said would avoid closure of the two final salary company pension schemes, which together have nearly 100,000 members.

It aims to pay £330m (€386.46m) a year, rising in line with inflation, until 2023 and 2026 for the two schemes to plug the £3.7bn (€4.33bn) deficit.

But members will have to either pay more to maintain the same benefits or see their pension pots reduce.

BA and Iberia announced the merger in April – a move which will create Europe’s second-biggest airline by market value after Lufthansa.

The firms formed the combined company International Airlines Group (IAG), of which BA shareholders will hold 56% and Iberia investors will take a 44% stake.

The European Commission gave the green light to the deal on July 14 and the two groups are to due to hold shareholder meetings in November.

Earlier this month, Willie Walsh, BA chief executive, revealed the airline had drawn up a shortlist of up to 12 airlines for proposed acquisitions or mergers, once the Iberia-BA tie-up is sealed and finished.

More on this topic

BA strike heads into second dayBA strike heads into second day

British Airways sorry for email error announcing wrong flight cancellationsBritish Airways sorry for email error announcing wrong flight cancellations

BA pilots to strike in dispute over payBA pilots to strike in dispute over pay

British Airways cancels almost 100 flights after suffering IT problems British Airways cancels almost 100 flights after suffering IT problems

More in this Section

Pound touches six-month high on Brexit optimismPound touches six-month high on Brexit optimism

Shares boost on trade talksShares boost on trade talks

Germany to avoid recession, says bankGermany to avoid recession, says bank

Not all bad news on the global economy frontNot all bad news on the global economy front


Lifestyle

‘Children of the Troubles’ recounts the largely untold story of the lost boys and girls of Northern Ireland, and those who died south of the border, in Britain and as far afield as West Germany, writes Dan Buckley.Loss of lives that had barely begun

With Christmas Day six weeks away tomorrow, preparations are under way in earnest, writes Gráinne McGuinness.Making Cents: Bargains available on Black Friday but buyer beware!

From farming practices in Europe to forest clearances in the Amazon, Liz Bonnin’s new show seeks solutions to some of the damage done by the world’s appetite for meat, writes Gemma Dunn.New show seeks solutions to some of the damage done by the world’s appetite for meat

Louis Mulcahy reads in Cork this weekend for the Winter Warmer fest, writes Colette Sheridan.Wheel turns from pottery to poetry

More From The Irish Examiner