London, England (CNN) -- British Airways said Tuesday it has reached an agreement on a recovery plan to address pension deficits, ahead of a merger with Spanish carrier Iberia.
The agreement avoids closing the pension plans. BA said it will now send the plan to the UK pensions regulator for approval.
Iberia now has three months to reach a decision on the recovery plan. Under the terms of its merger with BA, Iberia may pull out the deal if it doesn't deem the recovery plan satisfactory, BA said.