BA Rules Out Imminent Rights Issue

British Airways said Tuesday the timing was not right to raise funds in a rights issue, but it was looking at other options to improve its battered balance sheet.

Chairman Martin Broughton said BA was in discussions with its institutional investors about exploring opportunities in the convertible market, which it said was the best way to increase cash reserves.

A weekend news report suggested the airline had received support from some of its shareholders for a major rights issue, a move seen by analysts as an absolute last resort.

Broughton told the airline's annual shareholders' meeting it was clear that deficits in the group's pension schemes would be higher than the GBP1.74 billion pounds indicated last September.

The valuation of its funds was likely to be down by at least GBP1.2 billion (USD$1.95 billion), he said.

The company could not afford to increase its own contribution -- which totaled more than GBP1.8 billion in the last three years, he added.

"It is a sobering thought that this level of contribution is far in excess of our cumulative profits, which have been GBP1 billion, over the same period," he said.

The company will agree a revised funding plan with pension trustees after a review, he said.