It rather depends how you work out the figures. The City certainly haven't been duped, unlike a lot of BA employees. Both deficit calculations (2003 and 2006) were worked out using different methods. The former method was the legal accounting standard at the time for calculating the deficit. However, the 2006 figure (IAS19) is considered to be the more accurate. What am I getting at?

The 2003 deficit was £928 million, not using IAS19. Had the same (less accurate) method been used this time round, the deficit would indicate around £960 million. Therefore the deficit would have increased by 3%.

This more accurate IAS19 standard was available in 2003 and would have generated a deficit of £1.6 billion. Therefore the deficit has increased by 31%.

However you look at it, IT IS INCORRECT TO COMPARE THE £928M OF 2003 WITH THE £2.1B OF 2006.

BA knows this. So why haven't they republished the 2003 deficit using the more accurate IAS19 standard, so that we can compare like for like?

IMHO because they can legally get away with not doing so. If they can say to the employees that the deficit has more than doubled and we need to shaft you for half your pension, it sounds far worse than to say that it has increased by a third and we need to have a chat about slight changes to your benefits.

Yes, it is that simple. I'll let an accountant explain the detail.

BA are shooting themselves clean through the foot with the proposals as they stand. If passed in anything like the current form, or if we are all moved to the ludicrously-named and wholly nominal BARP, the meanest DC scheme in the major airline industry, then they are going to find, longer term, they lack pilots to fly the aircraft with.

It has become an utterly hostile, sinister place to work with new entrants facing a static promotion structure, outright management hostility, low morale, and crippling workloads {900 hours a year on an A320 through LHR for a thirty five year career - you'll be dead long before you retire}. Those nearing 55 now are already understood to be in a loose pact to resign if things get too bad to secure their accrued benefits. With our ludicrous crewing arrangements that alone will leave the flying programme shot to the proverbial. New entrants will be thinking long and hard about staying with BA too. The squeeze will come at them from both ends.

BA is in need of root and branch reform at management level - the recent senior resignations being but the tip of the iceburg of a culture of cynicism and contempt. They can afford far more than they claim in the pensions arena and its about time they faced reality and, as a first step, ended the culture of lies and spin that is endemic throughout senior management.

Human Factor

I actually agree with you for once - you are entirely right that the two valuations are incomparable per se. An increase has however occurred, which is unsustainable.

Speaking as an accountant, I think that Blueprint's proposal is the best route to take - not as I believe it right that people receive less than the terms on which they were recruited (a moral argument with which I agree), but that longevity keeps rising and rising.

If actuaries and the doctors who advise them do not know how long people will live, and bearing in mind longevity can only really be derived from the average age at which people now are dying, I cannot see how it is sustainable to have revaluations extending out another 50 years that add another 6 months of liabilities on each occassion to any company.

Ironically, the only hope for the short term is for the economy to overheat, raising interest rates, which in turn will discount the liabilities to a greater extent than at present (effectively lowering the burden on the balance sheet).

The only point that I must disagree with is - as before - the point that debt has been paid down. This debt was arranged at the time the aircraft were bought, and is not only highly planned and visible, but is not a "free cashflow" that is available to divert. Without paying this (which was continually paid through all historical years), the assets would be removed by the banks, terminating all revenue-generating ability of the company.

BA's huge problem from a company perspective is paying a large amount into a scheme, which - if the valuations improve so that it is no longer in defecit - the company cannot get back until the last NAPS pensioner expires, which is galling if the amount is massive. To counter this problem, some companies have put the surplus payment in a escrow account or trust, so that it is not caught up in the pension, but is available to pay down the defecit - a better situation for all parties, as the company has resources available if the pension markedly changes, and the pension has the resources to pay all that was promised.

I realise that it is galling to lose what is effectively expected, but it cannot be a zero-sum game.

BARP must also be improved as a priority, as if you do not get the whole workforce on the same side, you will be stuffed. It is a desirory contribution from the company, which should be at least half the employees contribution up to the maximum permitted in a year dependent upon age.

The directors should fire all the management and start again with some fresh-faced 25 year-old MBAs in my opinion. At least they might understand how to motivate and engage the workforce. It's worth taking a chance!

Quite honestly, I'm not interested in all the whys and wherefores!

I think it's high time ALL the Trades Unions clubbed together and lobbied parliament relentlessly about the state of ALL the UK Pensions.

Margaret Thatcher's Government first knew that there was a major problem when Robert Maxwell disappeared at sea, yet they did nothing and successive governments have allowed the pensions crisis to worsen and worsen!

Gordon Brown himself has exacerbated the situation by greedily grabbing taxation from pension contributions!

The Government created this problem by creating greedy, avaricious employers - it's up to the Government to dig us out of the hole.

.........and for heaven's sake, let's stop talking about pensions as if it's something we have to beg for cap in hand! It is actually DEFERRED EARNINGS and our right to retire and enjoy our twilight years with a bit of dignity!

I appreciate what you're saying Re-heat.

However, I remain at a loss to understand how a company that has been making consistent profits for the past few years, despite security threats and minor industrial strife whilst all the time paying off other debts at the rate of £1.2B per annum, all of a sudden decides to stop paying it's debts when it has the means to continue paying.

Because the banks will punish BA if they don't repay their debts, but BA management are gambling that the employees will not punish them for the same.

...and they will find a greater resolve amongst the pilots than they expect. This dispute will shape BA for the next decade or so. WW will either be gloating all the way to the bank, or be heading off back to Ireland with a collective boot up his jacksie.

Nobody wants a fight, but neither can we afford not to have one. See you on the picket line in early 2007.

...and bring your boot polish.:eek:

:E

Never has 'reap what you sow' been in sharper focus.

"Why should I go the extra mile when management won't move an inch" is becoming a constant refrain on FD's.

Its got to the point where even getting to the car park after work is a farce (how would you feel if, at the end of a 12 hour night shift, you were told to sit in your office for an hour before you could leave?) yet our management shrug their shoulders and tell us there is nothing they can do.

Fine. Get me some who can. I look forward to a new bunch after a combination of legal attacks on shady business practices, and, yes, a strike - because believe me we will do it.

I think it's the "fresh-faced MBAs" that have come into the airline that are part of the problem. The performance pay structure means that management get focussed on achieving their bonuses, quite frequently to the detriment of the wider interests of the airline because they are solely managing upward. It does not reward people who stand up for what is right or point out inconvenient issues.

Slightly off post but BikerMarks post was so to the point. The new engineering grade of Aircraft Maintenance Supervisor (AMS) which is being introduced to manage quality and airmanship standards will be a TMG grade and so will have pay and bonuses based on KRA's set by management.
Lets hope that they don't think like management as you have to live to retirement age to collect that pension.

Exactly.....and if you look at the T&C for Captains who would "want" to work as first officers after they turn 60...would make half the salary for 5 years as well.

How ridiculous of BA to think that their workforce will simply bend over this time.....:ugh:

'BARP must also be improved as a priority, as if you do not get the whole workforce on the same side, you will be stuffed. It is a desirory contribution from the company, which should be at least half the employees contribution up to the maximum permitted in a year dependent upon age.'

Bravo Re-Heat - I trust the BALPA BACC agree..............

sidthesexist

I absolutely agree. If there is no improvement in BARP, then it's a strike vote from me I'm afraid! I just hope some of my NAPS colleagues feel equally ashamed by their acceptance of BARP. If they don't, we're all screwed!

The pilots will strike. We can get jobs anywhere, management can't get the same deal they're on anywhere else. So, its a shame, but in this company, many are past caring if it goes down. And we will strike. :hmm:

Fortunately board members will be OK:

http://news.bbc.co.uk/1/hi/business/5319636.stm

There are early moves afoot by the Government, supported by many big businesses ,to change Section 67 of the Pensions Act to enable companies to change the terms and conditions of the amounts it has agreed to pay existing pensioners. Until now , once you started drawing a pension, the deal in force at that time,- eg inflation proofing etc,- had to be paid, so the pensioner was safe unless the company went under, at which point benefits could be frozen at the level paid at the time. Now is the time to start lobbying your MP and mobilising opposition to the next Brown grab.

BALPA held a General Members Meeting at LGW last night, LHR tonight. Industrial action cannot be far away now.

'The pilots will strike. We can get jobs anywhere'

So where are these 3200 pilot with 24 pay points up to 120K ?

Striking is the last thing you should do,i do know- i've done it.

If there isn't a sensible agreement, it's highly likely these jobs won't be with BA anyway, so we have nothing to lose.