Monarch Airlines has begun talks with trade unions and The Pensions Regulator (TPR) about cutting employees’ pay, benefits and defined benefit (DB) pension payouts.
Its 3,300 employees are being asked to take pay cuts and productivity improvements of between 25% and 35%, on top of 900 job losses.
The airline’s DB scheme, which closed to new members more than 10 years ago, still has a deficit of £158 million.
Monarch is likely to ask DB scheme members to vote on accepting cuts to their retirement income.
If they decline, the organisation could hand the scheme to the Pension Protection Fund, where payouts for yet-to-retiree employees are capped at £25,000 annually.
Monarch’s management team has also taken voluntary pay cuts of up to 30%.
A spokesperson for the British Airline Pilots Association said: “We anticipate balloting our members on [changes to terms and conditions] in the next week or so.”
Monarch and TPR declined to comment.