British Airways was plunged into fresh turmoil yesterday as cabin crew announced a new strike ballot and staff threatened to scupper a deal to tackle the airline’s huge pension fund deficit.
Unite, the union that represents BA’s 12,000 cabin crew, said that it would start balloting on industrial action next Tuesday. The ballot will close on July 27, raising the prospect of strikes in August — the busiest month for holiday travel.
BA lost an estimated £140 million during 22 days of disruption in May and early June as cabin crew walked out over changes to their terms and conditions and the removal of travel perks.
On top of that, the airline faces further difficulties after it emerged that a deal to tackle its £3.7 billion pension deficit could be rejected by some staff members.
Such a move would threaten the airline’s proposed merger with Iberia, the Spanish flag carrier, which depends on the resolution of the pension problems.
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BA said yesterday that it had reached agreement with its pension fund trustees on a recovery plan to address the deficit.
The airline will continue to contribute £330 million a year to the scheme and if its cash balances are greater than £1.8 billion, further contributions will be made.
Staff will have to increase the amount they pay into the schemes to maintain existing benefits or their pensions will be reduced. This plan was agreed with unions in March and will now be passed to the Pensions Regulator for approval.
However, people close to one union said that its members were unhappy about paying more and warned that they could withdraw their support for the deficit-reduction plan.
“All is not well,” the person said. “There are more problems with this than BA is presenting at the moment.”
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Analysts suggested that this could be a tactic to strengthen the hand of cabin crew as they negotiate a settlement to their long-running dispute with BA’s management.
BA said that union members had already voted in favour of the deficit plan and the deal would go to the regulator for approval as planned.
An agreement on tackling the deficit is vital if BA is to merge with Iberia as the Spanish carrier can walk away if it is unhappy with the pension arrangements.
Under the terms of the deal with trustees, the 31,000 members of the NAPS pension scheme who work for BA will see their contributions increase from 8.5 per cent of salary to 10.75 per cent if they want to retire at 60 on the same benefits.
The schemes will receive an additional £250 million of assets, including aircraft and property, from BA as security. Under the best-case scenario, BA aims to eliminate the deficit by 2019 for the NAPS fund and 2018 for the smaller APS fund.
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In response to Unite’s call for another strike ballot, BA said that it would strengthen its contingency plans to enable it to fly 100 per cent of long-haul flights from Heathrow.
The airline said: “Once again, Unite and its cabin crew branch Bassa have demonstrated their selfish lack of concern for our customers and their own colleagues. Their apparent wish to target the summer holidays of tens of thousands of families is deplorable.”