Sunday, July 23, 2006
Air Miles to Fund Pension Shortfall
The Independent reports that "British Airways is mulling the sale of its Air Miles customer loyalty scheme to help fill a pensions deficit that could be twice as big as first thought".
A novel concept, perhaps U.S. carriers will follow suit. How it will work specifically is not yet publicly known. It is reported that British Airways would receive up to 200 million British pounds "and provide flights in return" as part of a "complex transaction".
How the deal is priced will be of particular interest to many. Since airlines often employ discriminatory pricing, what exact flights should be bartered (in terms of revenue generation possibilities)? What are the tax implications? Is this the best way to finance the pension shortfall? What is the likely shareholder reaction? How will frequent fliers be impacted?
If it works for the airlines, what about the credit card companies and other industries that regularly employ reward programs to augment market share and plump up the bottom line? posted by Susan Mangiero at 7/23/2006 11:52:00 PM
PENSION RISK MATTERSSM focuses on pension financial risk issues from a governance and fiduciary perspective. The goal is to identify important topics, ask thought-provoking questions, examine best practices and encourage meaningful debate about the $10 trillion global pension industry upon which millions of individuals depend. Author and consultant Susan M. Mangiero, Ph.D. is a CFA charter-holder, Accredited Valuation Analyst, Accredited Investment Fiduciary Analyst and certified Financial Risk Manager. Dr. Mangiero combines many years of experience in finance with a keen interest in solving problems and simplifying the complex (
