BA to offload pension risk to insurance firm
BRITISH Airways said it had removed £1.3bn of pension risk in a deal with Goldman Sachs-owned insurance specialists Rothesay Life yesterday, removing another obstacle to its planned merger with Spanish airline Iberia.
BA will pay Rothesay for insurance on 20 per cent of its exposure to the Airlines Pension Scheme, which provides defined benefit pensions to retirees and their spouses.
The news comes a week after BA announced moves to plug its £3.7bn pensions black hole by accelerating payments to its two most mature schemes.
In April BA and Iberia signed an £5.3bn merger to create the world’s third-biggest airline after months of negotiations, during which the British airline’s pension deficit had been one of the main stumbling blocks.
The deal with Rothesay will not affect the deficit, but will cut the unpredictability associated with such a large defined benefit scheme.
“The transaction does not change contributions from British Airways and is consistent with the long-term aims to reduce the reliance on the employer over time,” said BA.