BA considers a fundraising
CASH-strapped airline British Airways (BA) said it was exploring options to raise funds yesterday, as the firm’s directors faced the wrath of its shareholders over controversial cost-cutting plans.
Chairman Martin Broughton said at the company’s annual meeting that BA was considering a convertible bond issue as a way of raising cash, while chief executive Willie Walsh said a rights issue had been considered and rejected.
Walsh added that job and pay cuts were “essential” for the airline’s survival.
“There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base,” he told the gathered shareholders. “These changes are essential to our short- term survival and more importantly to our long-term viability,” he added.
The airline is locked in talks with unions over measures to cut costs, after BA reported a record annual loss of £401m earlier this year.
Demand for premium tickets is tumbling in the downturn, and Walsh warned today that it may never return to pre-recession levels.
“There has been a structural shift in our premium markets. Fewer business travellers will choose the premium cabins, and those who do will pay less,” he said.
It also said it expects its pension-fund deficit to have grown by at least £1.2bn since last September.
Outside the meeting, staff protestors and trade union activists protested against pay conditions, while shareholders inside criticised Walsh for “talking BA into the ground” with his “fight for survival” campaign.