BA To Raise USD$1 Bln To Avert Cash Crisis

British Airways unveiled plans to raise about GBP600 million pounds (USD$1 billion) through a combination of bondholder debt and bank credit, when it reported a first-quarter loss of GBP100 million.

On Tuesday, chairman Martin Broughton had said BA was considering a convertible bond, not a rights issue, to shore up a balance sheet ravaged by the global aviation sector downturn.

BA said on Friday it planned to raise GBP300 million by issuing five-year bonds convertible into 15-20 percent of its shares.

It also said it had also negotiated a release of bank guarantees with its British pension fund trustees which would give it access to up to USD$540 million of bank facilities.

Chief executive Willie Walsh told reporters the moves eliminated any short-term threat of a financial crisis at the airline. "This puts to bed the suggestions British Airways is in any sort of risk in the short term.

"We are one of the strongest airlines in terms of cash. Our trading position is difficult, but we have taken action ahead of competitors," he said

BA also reported an operating loss of GBP100 million for the three months ending June 30, on revenues of GBP1.98 billion.

Airlines around the world have been suffering from what many consider the worst conditions ever due to falling passenger numbers in the face of global economic turmoil, and traditional carriers have faced intense competition from budget operators.

BA stock has lost nearly 70 percent of its value in the past year.