BA to raise £600m

Move to ensure "strong liquidity"

BA is to raise £600m which it said would ensure its "strong liquidity" during the current recession.

£300m of the cash will be raised through a convertible bonds issue.

The rest will be raised through releasing some bank guarantees. This will provide the cash-strapped airline with up to £330m.

BA also announced that it expected to make a £100m operating loss for the three months to June 30 "slightly better than market expectation."

BA said the bonds issue was to be launched today (July 17) and was conditional on approval of the shareholders at a general meeting.

It said it was its intention that existing institutional shareholders got the chance to take up a pro rata allocation if they wished to.

BA said the securities will be "senior unsecured convertible bonds due in 2014 which will be convertible into 15-20% of the issued ordinary share capital of British Airways."

It said it had also agreed term with the trustees of its pension fund to release back the bank guarantees.

These had originally been provided in 2006 but were accessible only if the airline became insolvent.

"This means that up to $540m (approximately £330m) of bank facilities will become available for the airline to draw in cash at any time until June 21, 2012," BA said.

 Willie Walsh, BA's ceo said: "Following discussions with institutional investors, we're taking action to improve our liquidity and strengthen our position within the industry.
 
"This goes hand-in-hand with our cost reduction and efficiency initiatives which are designed to create the right conditions for our sustainable, long term profitability. It also supports our continued investment programme to maintain our position as a leading global premium airline."

The airline is currently in talks with two unions, Unite and GMB which represent 36,000 of its 40,000 strong workforce, at the UK arbitration service ACAS.

 The two sides have so far failed to reach agreement on the carrier's plans to scrap 3,700 jobs, impose a two year pay freeze and change working conditions.

 www.ba.com