British Airways, Europe's third largest airline, said on Friday its pension deficit had risen to 2.1 billion pounds following a new actuarial valuation.

The figure was higher than expected, sending shares in the carrier down as much as 3 percent.

The actuarial deficit in British Airways New Airways Pension Scheme (NAPS) is set to rise from 928 million pounds to some 2.1 billion pounds, despite a doubling of BA's contributions and a recovery of the stock market, the airline said in an announcement.

Sources familiar with the situation had said earlier the new valuation was expected to be around 1.5 billion pounds to 1.8 billion pounds.

BA said in a statement the trustees confirmed that annual contributions of 497 million pounds would be needed to fund the scheme unless changes to future benefits proposed by the airline earlier this year were introduced.

BA earlier this year proposed raising the retirement age of its 2,500 pilots to 60 from 55 to tackle the deficit.

The airline also said at the time it wanted to introduce a slower accrual rate and a cap on pension rises, and proposed paying 500 million pounds to tackle the deficit.

Actuaries put BA's pension deficit at 928 million pounds following the airline's last three year review in 2003.

Unions had said they were waiting for details of the new valuation before negotiations can start to reduce the deficit.

BA shares were trading 1.5 percent weaker at 428 pence by noon after touching a low of 420 pence.