BA Pension Shortfall

[Hobo]

From BBC News today:

BA faces pension fund shortfall

The UK's embattled national airline BA is facing a pension fund shortfall of up to £1.5bn, raising fears that it may have to find extra cash to plug the gap, according to a press report.
There are concerns that airline could be forced to raise its pension contributions at the fund's next formal valuation in April next year, the Times newspaper reported.

BA told the newspaper that it was "comfortable" with the amount of money in its pension funds, and was under no pressure to raise contributions.

An increase in contributions would put the airline, struggling with a steep drop in bookings since the 11 September attacks, under added financial pressure.

Bear market

The airline's pension fund has been hit hard by the recent global stock market slump, which has seen share prices fall by as much as a third so far this year.

BA's pension fund has a total of about £5bn tied up in stock markets worldwide, the Times said.

Worries over BA's long-term prospects have put its own shares under pressure, wiping about 50% off their value since the start of the year.

The slump in BA's share price cost the airline its place in the prestigious FTSE index of the 100 biggest British companies by market value earlier this month.

It was the first time that BA has failed to qualify for inclusion in the FTSE 100 since it was privatised in 1987.

[eyeinthesky]

Interesting...

NATS is at present enjoying a pensions holiday, contrary to the actuarial advice and to the great concerns of its members...

I wonder what we will read about THEM before too long :eek:

[Brizzo]

Let's not get too excited!

The snapshot valuation of the fund reflects today's market capital value. Pensions are paid from the income, which is still flowing in. So the fund is fine. Sleep tight Nigel.

[Bigpants]

The fund has dropped in value, the fss is closed to new entrants and the stock market is going to take a long time to recover that £1.5 Billion

I have to say as a Nigel with at least 10 years left to run that I am very concerned. What happens if BA goes Belly Up in 3 years time?
Regards BP

[tired]

Guys, you're only going to be in trouble if BA collapses. The chances of that happening are non-existent. President Blair nade it quite clear on the BBC 6 o'clock News just after 11/9 last year that "of course we won't let BA fold". (His exact words.)

As someone who works for one of BA's rivals I found this a bit unfair as it amounts to Government guarantee of Ba's debts - why are they not going to guarantee my employer's debts too, thereby saving my own job? - but on reflection over the last year I have to admit that if I was the PM I would probably react the same. From memory BA carried 48 million pax in the year before 9/11, the rest of the UK's carriers between them carried less than half that. We now have the low cost airlines picking up a l.ot of Ba's traffic, but the situation still remains that if BA collapses the UK will have to rely on foreign carriers to bring in the majority of the toursists and bussinessmen on which our economy relies - I really can't see any government allowing that.

So the bottom line is that I think Nigel, his job and his pension are probably pretty safe - certainly far safer than my own job and pension. I have serious doubts whether my own company will survive Gulf War mk2, and Tony is very unlikely to bail us out.

[Hobo]

Those in APS will be OK for a while as I believe one of the provisions of this scheme is that BA have to sell off assets if nescessary to bail the fund out. This provision does not apply to NAPS however.

[maxy101]

Tired, if only it were true. Phony Tony and his cronies will say anything to win votes, but I sure don't want to bet my pension {and job} on his actions.....

[Brakes to Park]

BA pension fund to sell Berkeley House Square stake for 135 mln stg - report
22/09/2002 15:53:29
LONDON (AFX) - The British Airways PLC pension fund, which experts say faces a deficit of hundreds of millions of pounds, is to sell its 50 pct holding in Berkeley House Square, one of the UK's most valuable pieces of real estate, for at least 135 mln stg, the Observer reported.

The property forms practically the whole eastern side of the square and insiders told the newspaper Sheikh al-Nahyan of Abu Dhabi is likely to bid since he snapped up most of the west side of Berkeley Square last year.