International Consolidated Airlines Group SA on Thursday said the pension deficit for its subsidiary British Airways narrowed to £1.65 billion following its most recent valuation.

The valuation of the New Airways Pension Scheme, based on the scheme’s funding position at March 31 2021, showed a deficit of £1.65 billion, narrowed from a deficit of £2.4 billion three years prior.

The reduction in the deficit between 2018 and 2021 was mainly a result of British Airways’ contributions of £1.3 billion between April 2018 and September 2020 and the ‘outperformance of asset returns over the previous discount rate’.

These positive contributions were partly offset by the impact of the UK Government’s reform of its RPI inflation measure, aligning it with CPIH from 2030.

Since March 2021, the funding level of the scheme has ‘considerably improved’. It was in surplus on the same basis as the 2021 valuation and remains in surplus as of December 6.

This improvement was due mainly to the increase in UK government bond yields combined with positive relative returns from the scheme’s asset portfolio.

Due to an existing overfunding protection mechanism that remains in place, BA notes it is ‘not expecting to be required to make contributions to NAPS for the foreseeable future.’

British Airways will not pay a dividend in 2022 and 2023 and there will be a 50% matching contribution to NAPS if any dividend is paid in 2024.

Shares in IAG closed up 0.1% at 131.45 pence each in London on Thursday.

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