British Airways (BA) has confirmed that it has secured agreement with trustees of its New Airways Pension Scheme (NAPS) and Airways Pension Scheme (APS) to help address a funding shortfall.

The full recovery plan is now due to be submitted to the UK Pensions Regulator by 30 June and has successfully avoided the need to close the pension schemes, while maintaining the airline's annual contributions of £330m. It also sets out increases in line with inflation. BA said it would also make further deficit contributions if its balance at the end of the year exceeds £1.8bn, while schemes will receive £250m additional security over the airline's assets if it were to become insolvent in the future.

Spain-based Iberia will now have three months to make a decision on BA's pension recovery plan as part of a proposed merger between the two airlines, which could be shelved if Iberia deems the plan to be unsatisfactory. BA chief financial officer Keith Williams said: "The trustees understand that the airline is unable to increase its contributions in the current financial climate but we have agreed a recovery plan that avoids closing the pension schemes, gives NAPS members choice over their future pension accruals, and increases the prudence of the assumptions employed in managing the scheme.

"The Pensions Regulator's initial response to the overall package has been positive and we look forward to receiving their confirmation that they have no objections once they have time to analyse the plan fully."