BA pilots 'prepared to strike'?
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The thing that strikes me is, couldn't you all have seen this one coming a long, long time ago?
Every industry has or had the same problems. If you want the airline to survive, it'll have to be done. Of course, no bonuses should be paid etc. But by sobering the pension for new joiners, the more senior people in BA have first tried to rescue their own pension over the new joiners. It is clear to me, that there is a group of people in BA, who only care about money and themselves.
I know some new joiners and the absolutely ridicilous pay and pension schemes they are on. It's not very well divided!
Every industry has or had the same problems. If you want the airline to survive, it'll have to be done. Of course, no bonuses should be paid etc. But by sobering the pension for new joiners, the more senior people in BA have first tried to rescue their own pension over the new joiners. It is clear to me, that there is a group of people in BA, who only care about money and themselves.
I know some new joiners and the absolutely ridicilous pay and pension schemes they are on. It's not very well divided!
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Actually overstress variable accrual rate is still available for NAPS. I changed back to 45ths in April. Thought it best to lock in as much value as possible just in case it all turns to worms.
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I have not read all the posts in this thread but have got the general gist.
Am I basically right in the assummption that BA pilots (and presumably other staff) are very unhappy because the "defined benefits" pension scheme is underfunded and BA say they cannot afford to top it up to be fully funded?
If I am wrong just tell me.
I am nothing to do with BA but have just gone through a very similar experience with my own employer (whose trading margin by the way is 5%-6%) - as have hundreds of thousands of others.
Fact. Life expectancy has increased dramatically in the last 25 years and this means that pensions will have to be paid for longer.
Fact. The chancellor changed the tax rules on pension funds so that the rate of return on investments is effectively lower.
Fact. Stock market perfromance since the 90's has not been good giving poor returns on the money invested.
Fact. the method of calculating the funding level of pension funds has been changed to be a lot more conservative making the picture worse for the future.
These four factors basically mean that the pension fund has much bigger liabilities (current & future pensions) with a much reduced future income.
You might not like it and it might be painful but that is what has happened it is not unique to BA.
So what would YOU do in similar circumstances? Your ONLY choices are:-
1. Try to reduce the liabilities by reducing future pension liabilities
2. Start transferring money into the ever increasing hole - without any certainty that that it will help in the medium or long term
3. Do some of 1. and some of 2.
4. Do nothing and let the pension deficit force the company into liquidation so that there are no jobs and no pensions.
Those are the stark choices, there are no others.
Am I basically right in the assummption that BA pilots (and presumably other staff) are very unhappy because the "defined benefits" pension scheme is underfunded and BA say they cannot afford to top it up to be fully funded?
If I am wrong just tell me.
I am nothing to do with BA but have just gone through a very similar experience with my own employer (whose trading margin by the way is 5%-6%) - as have hundreds of thousands of others.
Fact. Life expectancy has increased dramatically in the last 25 years and this means that pensions will have to be paid for longer.
Fact. The chancellor changed the tax rules on pension funds so that the rate of return on investments is effectively lower.
Fact. Stock market perfromance since the 90's has not been good giving poor returns on the money invested.
Fact. the method of calculating the funding level of pension funds has been changed to be a lot more conservative making the picture worse for the future.
These four factors basically mean that the pension fund has much bigger liabilities (current & future pensions) with a much reduced future income.
You might not like it and it might be painful but that is what has happened it is not unique to BA.
So what would YOU do in similar circumstances? Your ONLY choices are:-
1. Try to reduce the liabilities by reducing future pension liabilities
2. Start transferring money into the ever increasing hole - without any certainty that that it will help in the medium or long term
3. Do some of 1. and some of 2.
4. Do nothing and let the pension deficit force the company into liquidation so that there are no jobs and no pensions.
Those are the stark choices, there are no others.
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If you can be bothered to type your opinion Chox, don't you think it would be courtesy to read the whole topic first.
I don't necessarily disagree with any of your 'facts'. But you're missing one vitally important one yourself...
BA say they can't afford to pay. We (i.e. the pilots) don't believe that is true.
We know what they have planned, there hasn't even been much attempt to disguise it (a little bit of a softening up campaign, which unfortunately seems to have worked on other staff groups)... A simple case of renege on the promises made to our staff so we can drastically increase our profitability and increase the bonuses and share option values of the senior managers and directors.
We are simply not prepared to let them get away with it. BA have just jumped on the bandwagon due to the media coverage of the 'pensions crisis'.
They can afford to pay. It's as simple as that.
I don't necessarily disagree with any of your 'facts'. But you're missing one vitally important one yourself...
BA say they can't afford to pay. We (i.e. the pilots) don't believe that is true.
We know what they have planned, there hasn't even been much attempt to disguise it (a little bit of a softening up campaign, which unfortunately seems to have worked on other staff groups)... A simple case of renege on the promises made to our staff so we can drastically increase our profitability and increase the bonuses and share option values of the senior managers and directors.
We are simply not prepared to let them get away with it. BA have just jumped on the bandwagon due to the media coverage of the 'pensions crisis'.
They can afford to pay. It's as simple as that.
Couldonlyaffordafiver
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Chox,
On the basis that BALPA's accountants have proved BA can afford to pay the pensions as they are, and clear the deficit, I'll go for option 4.
On the basis that BALPA's accountants have proved BA can afford to pay the pensions as they are, and clear the deficit, I'll go for option 4.
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Fairy nuff.
I did state that I had not read the whole lot - (45 pages not all "on topic") and will withdraw with two final thoughts.
If BA CAN really afford it now - what about next year and the year after - this is a long term problem.
2005 - "BA last year nearly doubled its contributions to £225m, but the deficit still rose by £205m to £1.4bn" - it now (July 2006) stands at closer to 2 billion - half the total value of the balance sheet. Your company is at REAL risk.
I did state that I had not read the whole lot - (45 pages not all "on topic") and will withdraw with two final thoughts.
If BA CAN really afford it now - what about next year and the year after - this is a long term problem.
2005 - "BA last year nearly doubled its contributions to £225m, but the deficit still rose by £205m to £1.4bn" - it now (July 2006) stands at closer to 2 billion - half the total value of the balance sheet. Your company is at REAL risk.
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Originally Posted by Choxolate
If BA CAN really afford it now - what about next year and the year after - this is a long term problem.
Your company is at REAL risk.
Your company is at REAL risk.
BA have paid off massive amounts of debt in the amazingly difficult trading conditions since 911... Circa £1.2 billion per year!
Now the good times are here for a while (notwithstanding last week's little hiccup, of course) a quick £1.2 billion into the pension fund should keep it going for a while. If it does all change in the future, I'd feel more inclined to dig in a help out if they were to act decently now.
They are not at REAL risk. They are ROLLING in money!
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True,- BA's "debt" has been going down annually , but that is largely just another year's aircraft leasing and financing costs,- not bundles of spare money from profits. As each year goes by and these costs are paid ,they reduce the outstanding liability under the contracts. Eventually as the leases expire and the aircraft are handed back to the leasing companies and banks the debt becomes zero. Wonderful . The only problem then is that there are no aircraft left, so all flying ceases. By not adding much needed long haul aircraft over the last few years BA have been able to show these " debt reduction" figures ,but they are acheived at the expense of expansion and handing markets and market share to the competition. Fact is BA is far from flush with cash and , relatively, they are shrinking. It is called managed decline.
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BA have paid off massive amounts of debt in the amazingly difficult trading conditions since 911... Circa £1.2 billion per year
Earnings after interest and tax are what you should focus upon - those indicate that there is spare cash to be found - what can be used for the fund has to be balanced between future investment, ensuring promises are kept to some degree, and rectifying the appalling situation where everyone sat back and allowed new joiners to have an appallingly lower pension.
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Thought it might be convenient to bring this to the top as it might be about to get interesting! BALPA are meeting BA this week (Wednesday?) on the 'new' £2.1bn 'deficit' and the results won't be pretty.
The results of the meeting will decide whether negotiations continue or not. BA BALPA members have been advised to prepare for 'all eventualities'
The results of the meeting will decide whether negotiations continue or not. BA BALPA members have been advised to prepare for 'all eventualities'
Last edited by overstress; 9th Oct 2006 at 07:52.
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IF many of the posts on the BMID industrial action thread are to be believed, I hope 'all eventualities' will not include similar behaviour by the BACC to that of the BMIDCC - IT WOULD APPEAR as tho' the BALPA members in BMID have been treated less than honourably........................
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€200m for Aer Lingus?
Hmm, I wonder how you lot (BA) would/will react when BA announce they've just spent £150m on buying Aer Lingus shares to help them defend being taken over by Ryanair!?! 
After all, you wouldn't want Ryanair on your front doorstep (LHR) now, would you??
After all, you wouldn't want Ryanair on your front doorstep (LHR) now, would you??
Last edited by Robertkc; 10th Oct 2006 at 20:06.
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And Ryanair won't be on our front doorstep cos O'Leary isn't stupid and knows Ryanair won't work at LHR in a million years. In fact I think he's said as much publically. Too expensive and too many delays to make a loco operation work.
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Suggest anyone that wonders why we have so little faith in our management as purveyors of truth on this, or any other issue, watches BBC2 at 10pm tonight.
2 senior BA managers resigned today after 3 months gardening leave over allegations of illegal activities.
Compare and contrast managements shady activities to the hand wringing that goes on for days here when we, or colleagues in other airlines, make borderline decisions under extreme pressure that are not even close to being illegal, and yet are dissected at will, with wonderful hindsight, out in the open.
2 senior BA managers resigned today after 3 months gardening leave over allegations of illegal activities.
Compare and contrast managements shady activities to the hand wringing that goes on for days here when we, or colleagues in other airlines, make borderline decisions under extreme pressure that are not even close to being illegal, and yet are dissected at will, with wonderful hindsight, out in the open.
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BA has a host of quality people who do a fine job for the airline and who are not always appreciated. But the same goes for most large companies. It would be a bad move for pilots to strike - it will only prove (as far as they were concerned) to management that pilots are a bunch of whingeing wasters, and in future their fine efforts will be demeaned even more.
No, a more mature and responsible approach would be better at the moment. BA needs all the help it can get in a number of areas. Top management is close to getting a bunker mentality, and no one would benefit if they do go that way.
No, a more mature and responsible approach would be better at the moment. BA needs all the help it can get in a number of areas. Top management is close to getting a bunker mentality, and no one would benefit if they do go that way.
Controversial, moi?
Top management is close to getting a bunker mentality
The management of BA would make an interesting subject for a thesis on how not to manage a large company.
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Blueprint
Having posted some ideas on this problem many pages ago (last yr), it is clear it is now coming to a head. It needs to as the NAPS debt has now increased by circa 130% since the last valuation and is probably already several £100M higher than the March 31st 2006 number.
I do not have the exact fund value to hand but suspect the current deficit number is close to 50% of what is needed to make NAPS viable.
Like any debt once you get behind the drag curve in a big way you just never catch up, unless you inject a huge capital sum. The current BA capital offer is clearly now only going to scratch the surface, so any future valuation is still going to be bad and unbalanced.
So what to do?
For the company I believe it has to give notice and close the scheme, (make it paid up). It can do this with 6 months notice. This will give them a huge liability but at least its crystallized their debt. They then negotiate with the trustees, a payment schedule, say £250Mpa over 10yrs. They can afford this as has been seen by their recent payments to reduce their capital debt.
They enrol the NAPS staff into the new money purchase scheme.
For the staff (NAPS people) I believe this is the fairest way as any benefits already earned are fully protected. As it stands the hybrid scheme being currently discussed is going to lead to "death by a thousand cuts of what has already been earned"
Why?
Because
1/ Staff will have to work longer to get their pension
2/ The benefits will be reduced by the lower accrual rates and inflation proposals
3/ If the scheme is still not in balance then BA will come back for more concessions
4/ The two current schemes within the BA workforce will lead to greater industrial disharmony as more and more new entrants join the current money purchase scheme.
I know its tough but at least it gives some future to BA and its workforce.
I do not have the exact fund value to hand but suspect the current deficit number is close to 50% of what is needed to make NAPS viable.
Like any debt once you get behind the drag curve in a big way you just never catch up, unless you inject a huge capital sum. The current BA capital offer is clearly now only going to scratch the surface, so any future valuation is still going to be bad and unbalanced.
So what to do?
For the company I believe it has to give notice and close the scheme, (make it paid up). It can do this with 6 months notice. This will give them a huge liability but at least its crystallized their debt. They then negotiate with the trustees, a payment schedule, say £250Mpa over 10yrs. They can afford this as has been seen by their recent payments to reduce their capital debt.
They enrol the NAPS staff into the new money purchase scheme.
For the staff (NAPS people) I believe this is the fairest way as any benefits already earned are fully protected. As it stands the hybrid scheme being currently discussed is going to lead to "death by a thousand cuts of what has already been earned"
Why?
Because
1/ Staff will have to work longer to get their pension
2/ The benefits will be reduced by the lower accrual rates and inflation proposals
3/ If the scheme is still not in balance then BA will come back for more concessions
4/ The two current schemes within the BA workforce will lead to greater industrial disharmony as more and more new entrants join the current money purchase scheme.
I know its tough but at least it gives some future to BA and its workforce.