On the go: British Airways has announced an agreement with its New Airways Pension Scheme to defer £450m of pension deficit contributions.
The contributions to NAPS, which was closed to future accrual in 2018 and adjusted in that year’s valuation to have a deficit amounting to £2.4bn, had been due between October 2020 and September 2021.
According to an announcement from BA on Monday, the contributions will now be added — plus interest — to the end of the existing recovery plan, currently set for March 2023.
The deferral covers monthly payments of £37.5m, and the airline has agreed to use property assets as security, which will remain in place until it has repaid the deferred contributions.
Coinciding with the deferrals, BA announced it will pay no dividends before the end of 2023, while any dividends paid from 2024 will be matched by contributions to NAPS amounting to 50 per cent of the value of the dividends.
The new arrangement is pending the agreement of a revised recovery plan based on the triennial valuation due in March. Should no agreement be reached, it will default to the existing recovery plan and repayment schedule.
Elsewhere, pub chain Mitchells & Butlers struck a deal with trustees of the company pension schemes to delay deficit contributions due between January and March 2021.
The deferred contributions, amounting to £13m a month, will instead fall due in April.
The agreement was part of a bid to raise £350m in funds to address the group’s liquidity position, which has deteriorated significantly as a result of the government’s anti-Covid lockdown strategies.
