BA in £600m survival plan

British Airways is to tap current shareholders for £300m through a convertible bond issue - bonds which can later be converted into shares. The rest of the £600m will be raised by releasing bank guarantees from pension schemes, which previously could only be accessed in the case of insolvency.

The airline is facing a possible summer of unrest, with employees and unions protesting against its plans to cut staff and reduce salaries. Chief executive Willie Walsh is currently working for nothing in July and has asked staff to follow his example. As a result of the cuts strike action is possible over the summer months, at a time when the business is already struggling with subdued demand. The UK's flagcarrier admitted this morning it lost £100m in the latest quarter to July and announced a loss of £401m last year.

Walsh said: "Following discussions with institutional investors, we're taking action to improve our liquidity and strengthen our position within the industry. 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."

The fund-raising would give BA liquidity of £2bn, enough, it hopes, to carry it through its patch of turbulence.