BA pension deficit increases but shareholders can receive dividends
BA pension holders were let down again today as trustees of the pension scheme allowed BA to restore dividends to its shareholders despite the BA pension deficit increasing.
It seems to me that deficits are now just being accepted as the normal. If allowed to pay dividends with their massive deficits still in place what incentive is there for companies like BA to re-float their pension schemes.
British Airways announced an agreement with the trustees of its large pension schemes that should lift a restriction on the airline paying a dividend.
The dividend bar was put in place in 2010, when the deficit in British Airways’ two defined benefit pension schemes was put at £3.2bn, and the airline committed to payments to fix this.
In the latest actuarial valuation of the schemes announced on Tuesday, the deficit was estimated at £3.3bn. British Airways said it would make annual payments of £360m over a 10 to 13 year period to the pension schemes, partly to fix the deficit.
With payments as low as this agreed there is little or no chance in my opinion of BA catching up on its pension deficit.
Early this year I said a big pension scheme will fall
Nigel Green deVere group
Blog written 11th June