BA urged to cap top tier benefits

LONDON - Top managers and senior pilots at British Airways should take a massive cut in retirement benefits as part of attempts to tackle its pensions black hole, according to representatives of lower-paid workers.

The GMB general union has told the company no one should enjoy a pension of higher than £50,000 ($143,000) a year, a cap which could affect thousands of existing staff who qualify for higher rates and those already retired.

Ed Blissett, the national officer of the GMB which represents ground staff, said some senior managers had much higher benefits than £50,000, including Sir Rod Eddington who enjoys a £250,000 a year pension after a five-year stint as chief executive.

Blissett made the proposal at last Thursday's meeting between union and management, called after the airline disclosed that its pension fund deficit had doubled to £2.1 billion.

Blissett said: "There may be legal difficulties in imposing a cap on pensions, but if the crisis is as grave as BA says ... then perhaps people being paid these substantial sums should voluntarily take a cut. I don't think £50,000 a year is a poverty income. I think the people on £130,000 a year or more should be taking a bigger hit than our members, some of whom are paid £16,000 a year."

Unions were angered by BA's proposals to tackle the deficit which included a £500 million one-off payment by the company into the so-called New Airways Pension Scheme which is dependent on the union accepting a package of cuts.

Other suggested changes were raising the retirement age for cabin crew from 55 to 65, and for pilots from 55 to 60. Pension increases on retirement for all would be capped at 2.5 per cent, and accrual rates reduced.

Blissett said a strike ballot among GMB members would be inevitable if BA repeated its hardline stance when talks resume.

The airline is keen to avoid industrial action after disruption from new security arrangements in August caused more than 1000 flights to be cancelled and deterred travellers.

The tougher security regime has cost the airline £40 million this year.

A spokeswoman for BA said it was aware of the GMB's proposal and would respond to it on Thursday.

Until the pension issue is settled, BA cannot press on with a multibillion-pound fleet replacement programme or resume dividend payments to shareholders.

- INDEPENDENT