BA delays £450m pension payment
Experts warn schemes mustn’t lose out in crisis
BRITISH Airways will delay paying £450m into its pension pot in the most drastic attempt yet to save cash.
The airline has agreed with trustees that it can defer monthly contributions of £37.5m to the New Airways Pension Scheme (NAPS) until September. It last made the payment in September 2020.
As part of the agreement, BA will be barred from paying dividends to parent company IAG before the end of 2023. The airline will put up some buildings at Heathrow as collateral as part of the deal, but not landing slots or planes. A spokesman for the trustees said: ‘Given the significant challenges facing the airline industry, NAPS concluded that there was a genuine need to offer support to BA.’ Pub group Mitchells & Butlers has also suspended payments to its staff schemes until April.
And figures showed that as many as 8pc of companies in the UK have deferred paying into pension schemes since the pandemic began.
Last April the Pensions Regulator eased its rules to give companies hit by disruption breathing space to defer their monthly deficit pension contributions.
Pensions expert Baroness Altmann added: ‘I wouldn’t want this trend to become established but we are in an economic crisis. ‘It is good they have put up assets in exchange, it is pragmatic. Nobody could have budgeted for what has happened over the last year.’
BA planes remain grounded due to the pandemic, which has hit the industry hard.
And on Friday IAG will lay bare the toll coronavirus took in 2020. The forecasts for its annual results are grim. Analysts expect the airlines conglomerate to post a loss of £4.9bn. This compares with profits of £2.6bn in 2019.
IAG raised £2.5bn from selling shares last autumn and worries are it will need to return to investors again.
Last June it was reported BA had sold some of its multimillion pound art collection to help it through the coronavirus pandemic. The collection included art by Damien Hirst, Bridget Riley and Peter Doig.
Meanwhile BA is IAG’s biggest and most profitable airline and the pause in dividends from it means it could be years before IAG shareholders see payments again.