BRITISH AIRWAYS is investigating the possible sale of Air Miles in a deal that could see cash released from the loyalty scheme to help to prop up the airline’s ailing pension fund.

A spokeswoman for the airline said that a sale of the scheme, a wholly owned BA subsidiary, was one of a number of options being considered as part of a company-wide review by Willie Walsh, the chief executive.

“We haven’t made a decision to sell,” the spokeswoman said. “We could keep it or change the way it’s run.”

European Capital, the venture capitalist, has been named as a potential buyer. Air Miles could sell for about £25 million, but it is possible that BA could take as much as £200 million out of the company in return for supplying flights, according to reports.

There are a number of other potential private equity bidders, including 3i, HG Capital and Palamon Capital Partners. Sir Keith Mills, who founded Air Miles in 1988, with BA as his first customer, was also thought to have been interested. Sir Keith also invented the Nectar loyalty scheme.

Money raised by the sale of Air Miles could make up part of the £500 million promised to the airline’s pension fund, which is currently undergoing an actuarial review. The review, due to finish in September, is expected to reveal that the scheme’s deficit had nearly doubled from its 2003 deficit of £928 million.

As well as the cash injection, BA has proposed that the retirement age for pilots rise from 55 to 60 and for cabin crew from 60 to 65.

Mr Walsh is believed to be considering the sale of BA Connect, the regional airline that flies from Birmingham to Manchester. Cash could also be released with the sale of BA’s interest in the Airline Group, which has a 42 per cent holding in National Air Traffic Services.

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