BA emergency funding 'puts concerns to bed'

Embattled airline British Airways today said a £600 million emergency cash funding "puts to bed" concerns over its future.

The move included the removal of £330 million in funds from its pension fund, which had been set aside for the pension scheme to use if the company became insolvent.

BA, which also said it expected to report operating losses of about £100 million for the quarter to June 30, said it planned to raise another £300 million through a debt issue.

Chief executive Willie Walsh said the move "puts to bed any suggestions that British Airways is in any sort of risk".

"We are clearly in a very strong position relative to most airlines," he added.

"However, trading conditions are difficult and that is a situation that the industry must address. I think British Airways is taking all the right actions."

The airline lost a record £401 million in the year to March and Mr Walsh has previously told staff that the firm is in a "fight for survival".

The company paid out nearly £3 billion in fuel costs last year due to rising oil prices, while recession has also hit demand for flights.

Mr Walsh wants to cut 3,700 jobs, freeze pay for up to two years and has asked staff to volunteer to work unpaid for up to a month.

Today he said: "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."

BA said the deal it had struck with the trustees of its UK defined benefit pension schemes undid the provisions arranged in 2006 which would have provided a buffer had the company gone bust.

Mr Walsh said the trustees would instead benefit from a stronger airline.

In a statement today the trustees said: "This will allow BA to use the financing facility that underpins the current guarantees to improve its liquidity position.

"The trustees are advised and are satisfied that this measure taken together with other corporate activities and initiatives will serve to improve the financial position and prospects of the company with a view to meeting its obligations to the scheme."

The pension funds said £230 million of the existing guarantees would be replaced by other security.

BA can draw money from the facilities at any time before June 21, 2012.

It said today's funding moves were expected to add £600 million of further liquidity to the airline, giving a total of about £2 billion.

The airline has already obtained facilities of more than three billion US dollars (£1.9 billion) for future aircraft deliveries.

Its debt issue will involve creating bonds that can later be converted into shares.

BA also said today that its first quarter results were expected to show revenues of approximately £1.98 billion.

It said its operating loss for the period was "slightly better than market expectation".

BA shares rose up to 5 per cent at one point today.

Airline analyst Gert Zonneveld of Panmure Gordon said the additional liquidity "is clearly positive" although he said the firm would still be hit by the exceptionally poor market conditions.

"We expect substantial losses in the coming two years," he said.

He added that the pension deficit remained a "major headache" and said the airline's shares now traded close to historic lows.

Start your day with The Independent, sign up for daily news emails
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect