BA says bankruptcy suggestion ludicrous
Reuters | Jan. 13, 2006
British Airways, Europe's third-largest airline by traffic, on Friday dismissed as ludicrous an actuary's suggestion the carrier would need to declare bankruptcy to clear its pensions deficit.
"This is the most ludicrous proposal imaginable to resolve our pension deficit. It will come as no surprise to those people living in the real world that this is not an option under consideration," BA said in a statement.
BA was responding to comments from Donald Duval, chief actuary of pensions adviser Aon Consulting, who said the airline may need to go into bankruptcy to restructure, a path followed by several US carriers. His comments were carried in media reports.
"We are one of the most profitable airlines in the world, our half-year operating profit was GBP?437 million (USD$776.3 million)," BA said. "We have nearly GBP?2 billion (USD$3.55 billion) cash in the bank. We want to find an acceptable solution to the pensions deficit that secures pensions for our staff and the future of our business."
The airline has a pension deficit of GBP?1.4 billion (USD$2.49 billion) and Chief Executive Willie Walsh said in an interview in the airline's own newspaper last week that BA "will begin talking to NAPS (New Airways Pension Scheme) members in the coming months about our proposals to solve this deficit, for solve it we must, once and for all".
The British Air Line Pilots Association (BALPA), which represents most of BA's pilots, said on Thursday that it would consider strike action depending on BA's proposals.
"BA pilots are standing absolutely firm on this issue," said BALPA General Secretary Jim McAuslan. "They are incensed. From what the company says, they could lose up to 36 percent of their pension entitlement. This is not acceptable."
BA said it was midway through a communications campaign aimed at informing some 34,500 pension scheme members about the implications of the deficit.
"It is unprofessional and unhelpful for BALPA to talk of industrial action at this time when the company has not put forward any proposals on pensions yet - neither have we begun formal discussions with BALPA."