New pension arrangements

British Airways PLC
10 May 2002




NEW PENSION ARRANGEMENTS FOR NEW UK STAFF

British Airways is to change the pension provision it makes for future new UK
employees, moving from a defined benefit final salary basis to a defined
contribution basis from autumn 2002.

The decision will not affect the pension benefits of the 65,000 members of NAPS,
the New Airways Pension Scheme, or the 36,000 members of APS, the original
Airways Pension Scheme, which was available to employees who joined before 1984.

The decision follows a thorough internal review of the company's UK pension
arrangements taking into account the changing competitive environment, new
accounting rules (FRS17), volatile markets and rising life expectancy.

Under FRS17, APS/NAPS taken together generate a company accounting shortfall of
£394 million as at March 31, 2002. APS/NAPS have investments together valued at
nearly £10 billion. Both schemes meet the statutory Minimum Funding Requirement
(MFR). The FRS17 valuation does not have any impact on cash flow.

John Rishton, British Airways' Chief Financial Officer, said: 'The change to a
defined contribution pension arrangement for future new UK staff is a measured
and necessary response to the competitive environment in which British Airways
operates. It does not affect the pensions of existing APS/NAPS members.'

                                 ends



Notes to Editors

  • BA has two main UK pensions schemes. NAPS was set up in 1984. It has
    roughly 65,000 members of whom 40,000 are existing staff, fewer than10,000
    are pensioners and about 15,000 deferred pensioners.

  • APS has 36,000 members of whom 4,000 are serving staff, 26,000 pensioners
    in payment and 6,000 deferred pensioners. It was set up in 1948 when the
    airline was state owned and was open to new members until1984.

  • In a final salary defined benefit pension scheme, the scheme provides
    members with a pension in retirement calculated as a proportion of their
    final salary.

  • In a defined contribution pension scheme, employees have an individual
    account to which they and the employer contribute. The level of pension paid
    on retirement depends on the value of contributions made, the investment
    returns achieved, and the value of the individual's account at retirement.

  • The Minimum Funding Requirement (MFR) is a Government measure that
    determines the minimum level of contributions which must be made into a
    pension scheme.





                      This information is provided by RNS
            The company news service from the London Stock Exchange