London - British Airways (BA) pilots are on course to accept a pay cut in return for shares in a "groundbreaking deal" aimed at bolstering the finances of the troubled airline, it was announced Thursday.

The pilots' union Balpa (British Airline Pilots Association) said it was recommending a pay and productivity package aimed at saving the firm 26 millions pounds (42 million dollars) annually over the next to years.

The package would also allow for up to 78 voluntary pilot redundancies as a result of changes to productivity. BA employs 3,200 pilots, of whom 95 per cent are Balpa members.

Under the scheme, pilots will see their basic pay cut by 2.6 per cent from October, as well as taking a 20-per cent cut in flying time allowances.

In return, pilots will benefit from a long-term incentive scheme under which they will be eligible, from June, 2011, to receive BA shares worth 13 million pounds.

Although pilots will have to hold these shares for three years, to June 2014, they will be free to sell them after that period.

"This is a unique agreement. We have always said that as a union we would share the pain of our members shared in the gain," said Balpa general secretary Jim McAuslan.

"This is groundbreaking and is a reflection of the unprecedented trading environment," he added.

The union's own research had indicated that BA was facing a real business challenge and this is "not the case of the employer crying wolf," said McAuslan.

The agreement still has to be ratified by members of Balpa.

It follows an appeal by BA to its 40,000 staff to work without pay for a month this summer or take unpaid leave.

"We are pleased that we have reached an agreement with Balpa and that it will recommend the proposals to its pilot members in a forthcoming ballot," a BA spokesman said.

BA chief executive Willie Walsh has described the measures as a "fight for survival" following the airlines losses of 401 million pounds in 2008. (dpa)