Strike ballot threatens as BA and unions fail to reach pensions deal

Attempts to reach a deal over British Airways' £2.1bn pension fund deficit failed yesterday as union leaders warned there was a massive gulf between the sides.

Management and employees' leaders agreed to meet again on 7 November, but some shop stewards believe a strike ballot is inevitable over airline plans which involve raising the retirement age and restricting pension payments.

A BA spokeswoman insisted that the talks were part of an "on-going" consultation process and were "positive and constructive".

She added: "We remain optimistic and continue to seek an amicable and joint solution." BA's chief executive, Willie Walsh, has admitted that tackling the black hole in the pension fund was "one of the biggest challenges" for the carrier.

Gary Pearce, a senior GMB official, said: "We are very disappointed at the lack of movement by the company to plug the gap in the pension fund and that no progress has been made." He said the company's final proposals would be put to union members.

Gordon White, a national official at Amicus, said his union had drawn up a package of savings which he believed could be put to his members. "However, there is still a gap between where Amicus and British Airways want to be," he said. "It is extremely important that any benefit changes are applied equitably."

Leaders of the Transport and General Workers Union - the largest employees' group - said unions had identified areas where changes could be made subject to members having the option to pay more to retain existing arrangements.

"The Company stated they were constrained by the requirements of the trustees, who want to put a recovery plan in place that would fund the deficit and secure accrued benefits," said one union leader.

"There is still some distance between the trade union position and that of the company and whilst further meetings are arranged the difficulty in concluding a settlement should not be underestimated. Meanwhile, the trade unions will be taking further advice and advising their members."

The GMB general union has told the company that if the pensions situation is as bad as management insists, no one should enjoy a pension over £50,000 a year, a cap which could affect thousands of staff who qualify for higher rates and those already retired.

Unions were angered by the airline's proposals to tackle the deficit, which included a £500m one-off payment into the so-called New Airways Pension Scheme, which is dependent on the union accepting cuts. Other suggested changes were raising the retirement age for cabin crew from 55 to 65, and for the 2,500 pilots from 55 to 60. Pension increases on retirement for all staff would be capped at 2.5 per cent, and accrual rates would be reduced.