British Airways yesterday admitted that it was looking at a "significant" operating loss this year as the carrier was forced to try to prove to the City that it had enough cash to survive the current downturn.
The company, which reported it had dropped into the red in the first half of this financial year, revealed that it secured £800m in banking facilities, mostly in recent weeks. Additionally, it has nearly £1.1bn in cash, leaving net debt at £6.5bn.
BA said it was burning cash at £2m a day and it pointed out that it could raise an additional £1.5bn by selling assets such as property or its stake in Qantas, the Australian airline.
Rod Eddington, BA's chief executive, said: "The bottom line is that we've got the necessary resources to see us through this period comfortably, with £3.4bn in cash or reasonably liquid assets. We don't need to raise any new money."
The company was responding to suggestions that it was running out of cash and that it would have to turn to investors to raise up to £1bn through the issue of new equity or bonds.
Gerald Khoo, an analyst at BNP Paribas, said: "They should have enough cash to survive the crisis but my feeling is that things will get worse before they get better."
Before exceptional items, BA reported a loss of £56m, for the six months to 30 September, compared with a profit of £217m for the same period last year. BA booked a one-off gain of £99m from the disposal of its low-cost airline, Go, during the period. Earlier this week, Merrill Lynch, BA's house broker, predicted the company would make a loss of £775m for the full year, as passenger traffic falls in the wake of the economic slowdown and terrorist attacks.
Lord Marshall, its chairman, said: "We anticipate a significant operating loss for the year."
BA insisted it was "ready to take advantage of consolidation opportunities" but most analysts said it did not have the balance sheet to buy other carriers. Mr Eddington said he considered the bankruptcy of rivals, the formation of alliances, and other capacity reductions to be consolidation.Reuse content