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BA edges towards Iberia merger

British Airways aggress to reduce £3.7bn pension deficit

23 June 2010

British Airways (BA) moved a step closer to securing a merger with rival airline Iberia following its proposed reduction of the pension deficit.

The firm has pledged to pay off the £3.7 billion black hole in its New Airways Pension Scheme and the Airways Pension Scheme by 2026.

Iberia hailed the move as a positive step towards the merger which would form Europe's third biggest airline.

It said: "The next step will be Iberia's decision on the pension recovery plan."

Should the Spanish company approve of the plan, the airlines would operate under the new name of International Airlines Group and employ around 60,000 staff.

However, the timescale could be one possible obstacle to the pension plan, as the UK pensions regulator wants all deficits closed before 2026.

Keith Williams, BA's chief financial officer, said: "The pensions regulator's initial response to the overall package has been positive and we look forward to receiving their confirmation that they have no objections."

BA also said another £20 million would be set aside for the pension schemes in case the company collapsed.

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