Pensions deficit

British Airways PLC
19 May 2006

PENSION DEFICIT TOPS £2 BILLION



British Airways' accounting valuation of its main pension scheme, the New
Airways Pension Scheme (NAPS), showed a deficit of £2,070 million at March 31
2006, up £101 million on the previous year.



Keith Williams, the airline's chief financial officer, said, 'The accounting
deficit reflects low long-term interest rates and has gone up despite the
company's increased contributions and strong equity markets.'



                                      ends




Notes to editors



•        British Airways adopted International Financial Reporting Standards
(IFRS) on April 1, 2005.  The deficit is now accounted for under IAS19, rather
than FRS17.



•        In the company's accounts, of the £2,070 million, £1,587 million is
recognised on the balance sheet and £483 million is unrecognised.  The
unrecognised amount occurs as a result of a smoothing mechanism allowed under
IAS19 ('the corridor') in respect of changes in estimates in both scheme assets
and liability benefits earned.  The variations in estimates for asset returns
and discount rates are the principal factors impacting the deficit.



•        The company's pre-tax pension liability for all schemes in
deficit increased from £2,191 million to £2,290 million.  Of the £2,290 million
£1,791 million is recognised on the balance sheet (£1,587 million
for NAPS and £204 million for other schemes in deficit) and £499 million is
unrecognised (£483 million for NAPS and £16 million for other schemes in
deficit).



•        At March 31, 2005 the total NAPS IAS19 pre-tax deficit (recognised and
unrecognised) was £1,969 million.



•        The NAPS actuarial deficit at March 2003 was £928 million.



•        The airline's cash contribution to NAPS in 2005/6 was £246 million.





The airline's proposal on pensions announced on March 23, 2006 includes:



•        Keeping a final salary pension scheme with no changes to past service
pension benefits, no increase in staff contribution rates but changes to
members' future benefits.



•        Changes include raising the normal retirement age, a slower accrual
rate, pensionable pay increases capped at no more than inflation and pension
increases on retirement capped at 2.5 per cent each year, with the company and
staff to share impact of changes in life expectancy.



•        In return, the airline will make a payment of £500 million into NAPS
after the changes are accepted.



Certain information included in this statement is forward-looking and involves
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by the forward looking statements.



Forward-looking statements include, without limitation, projections relating to
results of operations and financial conditions and the Company's plans and
objectives for future operations, including, without limitation, expected future
revenues, financing plans and expected expenditures and divestments.  All
forward-looking statements in this report are based upon information known to
the Company on the date of this report.  The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.



It is not reasonably possible to itemise all of the many factors and specific
events that could cause the Company's forward looking statements to be incorrect
or that could otherwise have a material adverse effect on the future operations
or results of an airline operating in the global economy.  Information on some
factors which could result in material difference to the results is available in
the Company's SEC filings, including, without limitation the Company's Report on
Form 20-F for the year ended March 2005.




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