British Airways to raise $982m
British Airways Plc, Europe’s third- biggest airline, plans to raise 600 million pounds ($982 million) in funding as declining revenue in its most profitable business drains cash reserves.
The carrier is starting a 300 million-pound sale of bonds convertible to shares, London-based British Airways said in a statement today. Trustees of its defined-benefit pension plans agreed to release some bank guarantees to the airline, providing a credit line of as much as 330 million pounds, it said.
British Airways reported an operating loss of about 100 million pounds on revenue of 1.98 billion pounds for the fiscal first quarter ended June 30. Chairman Martin Broughton said on July 14 that the airline was in talks on the convertible-bond sale because an extended slowdown in traffic “would be stretching” the company’s cash reserves, which equal more than 15 percent of sales.
The carrier’s credit rating, already two levels into junk status, was lowered by one grade to Ba3 from Ba2 on July 9 at Moody’s Investors Service, which said declining traffic and higher fuel prices are likely to “further weaken metrics” in the fiscal year through March 2010.