The transaction will cover about 22,000 pensioners and is the largest ever bulk annuity policy arranged with a UK pension scheme, the insurer said, with L&G Chief Executive Nigel Wilson adding that further transactions are planned in the next few months to remove legacy liabilities.

"The second half of 2018 is likely to be a record six months for our PRT [pensions risk transfer] business," he said in a statement.

British Airways, owned by International Consolidated Airlines Group, is among a number of large British companies that have big pension deficits and are looking to reassure investors about large sums owed to former workers.

The airline-sponsored pension scheme said the L&G deal will cover about 60 percent of all pensioner liabilities.

ICAG shares were up 0.4 percent at 0800 GMT.

The deal covers liabilities in one of British Airways' pension schemes, the Airways Pension Scheme (APS). That scheme's 2017 annual report said it has total liabilities of 7.7 billion pounds.

The airline's largest defined-benefit scheme, New Airways Pension Scheme (NAPS), had liabilities of 19.8 billion pounds and a deficit of 3.7 billion pounds, according to that scheme's annual report.

Virginia Holmes, chair of the scheme trustee for APS, said Thursday's deal was the latest in a number of insurance arrangements made by that scheme to reduce risk and increase security for members.

"Today's announcement is the culmination of much hard work undertaken over several months and we are pleased to be taking this step in the scheme's de-risking journey," she said in a statement.

Last year British Airways replaced past schemes with a new defined-contribution pension scheme with flexible benefits in a bid to address the rising cost of future pension provision.

(Reporting by Emma Rumney; Editing by David Goodman)