The pilots union BALPA is leading a campaign against the UK flag carrier British Airways' (BA) plans to reform its pension scheme in a bid to plug the massive gap in its fund.
According to a report in the Financial Times, the BA pension deficit currently stands at some GBP1.4 billion, and the airline’s new head, Willie Walsh, is determined to act to reduce the deficit come what may. However the latest sounds emerging from the unions suggest that BA is on a collision course as it plots swathing cuts to retirement entitlement.
Mr Walsh has a reputation as a brutal cost-cutter from his time in charge of Irish carrier Aer Lingus, and he has made no bones about the need to solve the pension problem before it starts to impact upon BA’s ability to invest on the operational side of the business.
The severity of the challenge facing BA was further highlighted by another media report suggesting that it may have to seek bankruptcy protection in order to rid itself of its crippling burden.
Leading actuary Donald Duval, chief actuary of pensions adviser Aon Consulting, argues that the airline will have little choice but to follow the example set by several US players, including Delta and United Airlines, which have used Chapter 11 protection as a means to restructure.