IAG said the new funding deal was based on a valuation of the scheme's position at the end of March 2015, which put the technical deficit at 2.8 billion pounds ($3.4 billion), compared with the 2.7 billion pounds recorded three years earlier.

Under the deal, BA will make fixed deficit contributions of 300 million pounds per year until 2027 - broadly in line with the amount it paid under the previous three-year term. Depending on its cash levels, it could also pay up to an additional 150 million pounds into the scheme each year.

The deal reassured investors after the company said in July it needed more time to agree the terms. Its shares spiked 5 percent on the news.

The nearly 100-year-old airline has two pension schemes and the agreement announced on Wednesday related to its largest scheme, the New Airways Pension Scheme.

"The UK Pensions Regulator has been informed about the terms of the agreement," it said.

The company said the ratio of assets relative to liabilities in the scheme had improved to 82.7 percent from 78.3 percent in 2012, when it conducted its previous triennial review.

The assets in the scheme had increased by 3.7 billion pounds to 13.3 billion pounds at end-March 2015, compared with three years' earlier, it said, while the liabilities had risen by 3.8 billion to 16.1 billion pounds over the same period.

Britain's vote to leave the European Union in June, a subsequent interest rate cut and a fall in bond yields to a record low have worsened many companies' pension deficits.

(Reporting by Kate Holton; Editing by Paul Sandle and Mark Potter)