BA proposes convertible bond to weather storm

Rumours of a £500m rights issue are 'nonsense'

British Airways has ruled out a rights issue, but is talking to institutional investors about a convertible bond to raise the cash to survive the "biggest crisis ever" in the industry.

The airline's chairman, Martin Broughton, dubbed the last 12 months an "annus horribilis" at yesterday's annual meeting. The struggling flag carrier's directors faced placard-waving demonstrators outside the venue calling for the resignation of its chief executive, Willie Walsh, over cost-cutting plans that could see 3,700 jobs lost.

Mr Broughton told investors and employees: "This is the biggest crisis the aviation industry has ever known – and it continues."

There was little good news. The market for first- and business-class travel may never recover, leaving the company facing a "fundamental challenge" to its business model, Mr Broughton said. And its pension deficit may have ballooned by more than £1bn in the last year alone. "The deficits remain huge and, in the current climate, the company will not be able to afford to increase its own contribution," he said.

Against such a background, BA wants to shore up its balance sheet. Until agreement is reached over the convertible bond, neither the scale of the proposal nor the plans for spending the money raised will be clarified. But Mr Walsh quashed market rumours of an imminent rights issue, and described recent reports citing a £500m figure as "nonsense". "Discussions about the convertible bond are on-going, but we are not looking at a rights issue," he said. "We see liquidity as very important in the current environment and that's why we are focused on cash and cost reduction, and the reason we've re-modelled our capital expenditure."

Cost-cutting negotiations with trade unions representing cabin crews, check-in attendants and ground handling staff were the main point of controversy yesterday, although all parties claim strikes are not on the agenda. Mr Walsh refused to comment on the progress of negotiations, but said he is confident a peaceful solution will be reached. "I firmly believe the people working for us understand the challenges we face," he said. "There is no reason whatsoever for BA to face industrial action."

The shareholder reaction was mixed. There was some acknowledgement that such a dire situation may require tough measures, but even directors' warm commendations of BA cabin crews drew some ire. Frank Smith, a shareholder, said: "It is no use getting up there and preaching about respect for the cabin crews and then kicking them in the teeth."

And despite repeated emphasis on the dire state of the industry, not everyone at the AGM was convinced. One shareholder claimed Mr Walsh's oft-repeated claim that the company is "fighting for survival" is part of the problem. "Why is Mr Walsh talking BA into the ground?" the investor said. "I am shocked and dismayed our chief executive is talking in a way that has such a negative effect on the share price."

Another shareholder suggested the group start talking to Sir Richard Branson about his recent claims he will buy BA when the shares have dropped below £1. But Mr Broughton had short shrift for Virgin Atlantic's announcement of a £68m profit in May. "Richard Branson is rather more talk than substance," he said. "If you talk to some of the analysts you would see things represented rather differently."

Lemmings: No animals were harmed...

Symbolic animals may be the latest good idea for a PR stunt – but just make sure you can guarantee the participants' health and safety. When GMB trade union organisers decided to bring 12 live lemmings to yesterday's British Airways AGM to illustrate their view of the future under chief executive Willie Walsh, little did they know they would be facing a grilling of their own from the RSPCA. The furry critters hired for the occasion had to be taken away after inspectors at the Queen Elizabeth II conference centre found that they were "stressed".

Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
The Etihad Stadium, home of Manchester City
premier leaguePlus all the build-up to Man City vs Chelsea and Everton vs Palace
Polly Borgen at the Tribeca Film Festival in 2012
peopleThe Emmy award-winner starred in Cape Fear, the Sopranos and Desperate House Wives
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam