£450M in Pension Payments Deferred by British Airways Due To COVID Cuts

Citing escalating coronavirus cuts, British Airways is deferring £450 million in pension payments under an agreement with the New Airways Pension Scheme.

British Airways continues to cancel its routes as the pandemic continues to drag on, leading to negotiations under NAPS to delay its scheduled £37.5 million per month payment, reports The Guardian. In addition, the airline’s owner, International Airlines Group (IAG) has procured a £2 billion loan to help keep the industry afloat as COVID restrictions remain in place.

British Airways plans to repay the funds meant for pension payments with interest. The move will help the airline retain hundreds of millions in cash, says the Guardian.

“In addition to these arrangements, IAG continues to explore other debt initiatives to improve further its liquidity,” stated the company.

Despite these cost-cutting measures, British Airways has had to layoff over 10,000 workers in the past year due to coronavirus restrictions on travel. The airline is usually a major source of income for IAG, but revenues have gone into free fall.

Travel for leisure is not expected to resume under COVID-19 restrictions until May at the earliest, says The Guardian.

In addition to stalling profits, the news of British Airways deferring pension payments may not be welcomed by all. The NAPS pension payments were started after a 2018 valuation uncovered a multibillion-dollar deficit in funds earmarked for staff hired prior to 2003, notes The Guardian.

British Airways has reportedly paid £1.3 billion of a total £2.4 billion deficit.

British Airways Group Claims

The airline also faces claims in group litigation over a September 2018 data breach that allegedly exposed the payment information of customers who used the company’s website between 21 April 2018 and 28 July 2018; and/or, 21 August 2018 and 5 September 2018.

British Airways, along with other major airlines, also face claims from U.K. citizens who had their flights cancelled during the spring surge of the virus, but were not issued a refund. Consumers told The Guardian that the airline offered them non-exchangeable vouchers that were subject to an expiration date.

What do you think of British Airway’s delay of pension payments and other cost-cutting measures? Tell us in the comment section below!

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