International Cons Airlines Group British Airways NAPS triennial valuation (2159R)
25 Ottobre 2019 - 4:10PM
UK Regulatory
TIDMIAG
RNS Number : 2159R
International Cons Airlines Group
25 October 2019
BRITISH AIRWAYS NAPS PENSION SCHEME TRIENNIAL VALUATION
International Airlines Group (IAG)'s subsidiary British Airways
has signed an agreement with the Trustee of its New Airways Pension
Scheme (NAPS) on the scheme's regular triennial valuation.
The valuation is based on the scheme's funding position as at 31
March 2018 and reflects the closure of the scheme to future accrual
on that date.
The main terms of the agreement are:
-- A technical deficit of GBP2.4 billion (compared to GBP2.8
billion at 31 March 2015, which was the basis for the previous
deficit recovery plan).
-- British Airways will make fixed deficit contributions of
GBP450 million per year until March 2023 (compared to the previous
arrangement of GBP300 million per year fixed deficit contributions
and up to GBP150 million per year variable contributions ('cash
sweep') based on British Airways' cash position).
-- The fixed deficit contributions will be made until March 2023
(compared to March 2027 under the previous recovery plan).
-- Consistent with the previous arrangements, British Airways
will pay a one-off contingency payment of GBP250 million in 2019,
as detailed in IAG's 2018 annual report.
-- A new overpayment protection mechanism has been agreed,
whereby deficit contributions would be suspended if the technical
deficit is removed.
-- British Airways has increased its flexibility to make
dividend payments to IAG of up to 50 per cent of pre-exceptional
profit after tax (compared to 35 per cent of post-exceptional
profit after tax previously). British Airways can pay a higher
dividend than 50 per cent of pre-exceptional profit after tax in
return for an agreed mechanism to either accelerate contributions
or provide a guarantee.
Steve Gunning
Chief Financial Officer
25 October 2019
NOTES TO EDITORS
As at 31 March 2018 the funding ratio of assets relative to
liabilities on a technical provisions basis had improved to 87.3
per cent from 82.7 per cent at 31 March 31 2015.
The agreed GBP250 million one-off payment relates to a
contingent payment mechanism agreed with Airways Pension Scheme
(APS) and NAPS in 2010. As part of the settlement in April 2019
between British Airways and APS (which is awaiting court approval,
expected in Quarter 4, 2019), the payment of these funds will be
made to NAPS.
British Airways' fixed deficit payments of GBP450 million per
annum will be paid as equal monthly amounts form April 2020.
Under the overpayment protection mechanism, these contributions
will be paid into escrow if the funding ratio on a technical
provisions basis reaches 97% and will be suspended if the scheme
reaches 100% funded. Contributions would restart if funding
subsequently falls below 100% and, if required, catch-up payments
would be payable commensurate with the contributions forgone during
the period of suspension.
For the next three years, if British Airways pays a dividend to
IAG higher than 50 per cent of its pre-exceptional profit after
tax, it will either provide the scheme with a guarantee for 100 per
cent of the amount above 50 per cent or 50 per cent of that amount
as an additional cash contribution to which the above overfunding
mechanism applies. Mitigation payments will automatically count as
a pre-payment of the fixed deficit contributions due at the end of
the plan.
The agreement is based on an assumed de-risking path, with a
steady switch of three percent of the schemes assets each year from
return seeking assets such as equities to liability matching assets
such as bonds. In the event that funding progress is better than
expected, half of this excess performance will be used to reduce
the deficit with the other half used to reduce volatility by
accelerating de-risking.
The UK Pensions Regulator has been informed about the terms of
the agreement.
LEI: 959800TZHQRUSH1ESL13
This announcement contains inside information and is disclosed
in accordance with the company's obligations under the Market Abuse
Regulation (EU) No 596/2014.
Forward-looking statements:
Certain statements included in this announcement are
forward-looking. These statements can be identified by the fact
that they do not relate only to historical or current facts. By
their nature, they involve risk and uncertainties because they
relate to events and depend on circumstances that will occur in the
future. Actual results could differ materially from those expressed
or implied by such forward-looking statements.
Forward-looking statements can typically be identified by the
use of words such as "expects", "may", "will", "could", "should",
"intends", "plans", "predicts", "envisages" or "anticipates" or
other words of similar meaning. They include, without limitation,
any and all projections relating to the results of operations and
financial conditions of International Consolidated Airlines Group
S.A. and its subsidiary undertakings from time to time (the
'Group'), as well as plans and objectives for future operations,
expected future revenues, financing plans, expected expenditure and
divestments relating to the Group and discussions of the Group's
business plan. All forward-looking statements in this announcement
are based upon information known to the Group on the date of this
announcement and speak as of the date of this announcement. Other
than in accordance with its legal or regulatory obligations, the
Group does not undertake to update or revise any forward-looking
statement to reflect any changes in events, conditions or
circumstances on which any such statement is based.
It is not reasonably possible to itemise all of the many factors
and specific events that could the forward-looking statements in
this announcement to be incorrect or could otherwise have a
material adverse effect on the future operations or results of an
airline operating in the global economy. Further information on the
primary risks of the business and the Group's risk management
process is set out in the 'Risk management and principal risk
factors' section in the Annual Report and Accounts 2018; these
documents are available on www.iairgroup.com. All forward-looking
statements made on or after the date of this document and
attributable to IAG are expressly qualified in their entirety by
the primary risks set out in that section.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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