From the FT, 12 Jan:
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BA pilots set to take action over pensions
By Kevin Done, Aerospace Correspondent
Published: January 11 2006 22:39 | Last updated: January 11 2006 23:27

British Airways pilots are set to launch on Thursday the first challenge by
any part of the workforce to the airline's radical plans to reform its
pension scheme aimed at lowering its £1.4bn deficit - one of the biggest
pension fund shortfalls facing any UK company.

The British Airline Pilots Association (Balpa), which represents 2,800 of
BA's 3,000 pilots, warned that pilots were prepared to take industrial
action to safeguard pensions, which would be the first strike by BA pilots
and would paralyse the airline's operations.

Jim McAuslan, Balpa general secretary, said "BA pilots are standing
absolutely firm on this issue. They are incensed. From what the company says
they could lose up to 36 per cent of their pension entitlement.

"This is not acceptable. A pension is deferred pay. A promise is a promise,
a commitment is a commitment, and BA has to honour its pension pledges to
its workforce."

The hardline stance taken by the pilots union sets BA and Willie Walsh, its
new hardline chief executive on a dangerous collision course with a key part
of the workforce.

The airline is in the midst of a sensitive consultation exercise with its
46,000 employees to prepare the ground for sweeping changes in pension
entitlements.

Mr Walsh warned recently that urgent actions must be taken, if the growing
deficit was not to impair the group's ability to invest in new aircraft.

He said BA was contributing five times more than its employees to the
pension funds on average compared with a ratio recommended by the trade
unions of two-to-one. "We are well outside the norm. That is not sustainable
and must be addressed."

He said that BA needed "to be very conscious about its pension deficit in
everything we do. It must be tackled and sorted out once and for all."

The airline has one of the biggest pension deficits compared with its stock
market value of any of the companies in the FTSE-100 index.

Mr McAuslan said last night that BA was "prioritising paying off other debt,
creating cash, looking for shareholder return and investing in new aircraft.
We are bottom of the pile."

Mr McAuslan has written to the 2,800 Balpa members at BA advising them to
let their families know "what is happening because pensions are not just
another one of this year's terms and conditions, they are for life.

"The time may come when we will need your support for action to protect your
pension, and you in turn may need your family's support, It is as serious as
that."

Balpa has assembled a team of actuaries, forensic accountants, lawyers and
pension advisers to challenge BA's version of its pensions predicament.

Mr McAuslan said it would "meet BA head to head...the team will not accept
anything BA says at face value, they will probe every statement, test every
assumption.

"BA says its employees should pay off the deficit. Pilots reject that
totally. If British Airways has debts to its bank or to its creditors, it
pays those debts. If it has a debt to its workforce and pensioners, which it
has in the pension fund deficit, it has to meet that responsibility too."