British Airways' (BA) unions have agreed to increase contributions and to a reduction in future benefit accrual to help repay its £3.7bn pension deficit.

BA and its joint trade unions, BALPA, GMB and Unite, have concluded consultations on the future benefits of BA's defined benefit (DB) pension schemes, with proposals that intend to avoid their closure and maintain the airline's contributions at the current level of £330 million per annum.

The new benefit structure will be proposed to trustees of the scheme and will form part of the negotiations towards a recovery plan, expected for presentation to the Pensions Regulator (TPR) by 30 June 2010.

The statements from BA include forward-looking ones, and involve 'risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward looking statement'.

These include projections relating to results of operations and financial conditions and the company's plans and objectives for future operations.

However, David Lane, partner at Lane Clark & Peacock (LCP), said these measures will not have any impact on the huge existing deficit unless they are combined with other measures. "Pension deficits are an important issue and remain high on the list of concerns for companies, trustees and pension plan members. British Airways is working towards a merger with Iberia, and the funding of BA's £3.7bn pensions deficit is a key issue that needs to be resolved before the merger is completed.

"The reports that BA has reached agreement with unions on an increase in member pension contributions and reduction in future benefit accrual will help reduce the cost of providing pensions going forward, but unless combined with other measures will not have any impact on the huge existing deficit. Instead it will take many years to eliminate this. BA's pensions risk is not going to vanish overnight."

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