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Sat, Jul 18, 2009 - Page 10 News List

British Airways expects quarterly loss, plans to raise US$980 million in debt

AP , LONDON

Hard-pressed British Airways (BA) said yesterday it expected a loss for the three months through June 30 and that it planned to raise £600 million (US$980 million) to see it through the recession.

It said it would report an operating loss of £100 million for its fiscal first quarter.

The airline, which has been seeking cost-cutting deals with staff, announced it intended to raise £300 million through a convertible debt issue and that it had secured the return of £330 million in guarantees from pension fund trustees.

The debt issue is subject to approval by shareholders.

BA shares were up 2 percent at £1.348 on the London Stock Exchange.

The securities will be senior unsecured convertible bonds due in 2014, which can be converted into 15 percent to 20 percent of airline shares. The bonds will be available to institutional shareholders on a prorata basis, the airline said.

BA secured an agreement with trustees of its defined benefit pension plans in the UK to release up to US$540 million in guarantees provided in 2006 as security against the company’s possible insolvency.

The facilities will be available to the airline through the middle of 2012, BA said.

The company has called for 3,700 jobs cuts from its 40,000 staff and a two-year pay freeze.

It has also sought volunteers to temporarily forgo their paychecks, as chief executive Willie Walsh is doing this month.

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