Troubled British Airways plans to raise nearly a billion dollars of emergency cash funding as it tries to survive the current economic downturn, CNN is reporting. CEO Willie Walsh said the plan would help the airline maintain its position as a global premium business.
The news is an indication of bad times at BA, which is facing the threat of summer strikes by ground staff. Earlier this month, its pilots accepted a pay cut in exchange for the promise of shares to help the airline save money.
The airline said it would try to raise $978.6 million in two ways, the company said. Half the money will come from a $489 million convertible debt issue. They are essentially IOUs that will be repaid with interest or converted into BA shares in the future. The airline's pension fund has also allowed the company to draw on bank guarantees set aside for the pension in case of bankruptcy. That means it will have access to as much as $540 million if it needs to draw on cash.
The airline lost $163 million in the first quarter of the year, ending June 30, the company said Friday in a pre-announcement of its earnings. That figure was slightly better than the market expected, the airline said, but it also means the company is losing about $1.6 million a day.
As of June 30, the airline had approximately $2.04 billion of cash and general facilities of around $212 million.