British Airways

BA could be forced to tap the market for 500 million pounds to shore up its balance sheet

Image via saidaonline.com

LONDON - British Airways Plc has secured shareholder backing for a possible rights issue of new stock, according to a report in the Observer newspaper on Sunday.

BA Chief Executive Willie Walsh sounded out a dozen of the airline's largest institutional investors about raising capital at a meeting late last month at the offices of investment bank Merrill Lynch, the paper said.

It said analysts had suggested BA could be forced to tap the market for 500 million pounds ($810 million) unless passenger numbers recover soon to shore up the airline's balance sheet.

The Observer quoted an unnamed fund manager present at the meeting as saying most shareholders believed a rights issue from BA was at some stage inevitable.

BA told shareholders at the meeting it was confident it would not need to resort to a capital injection unless trading deteriorates significantly or the airline is hit by strike action this summer, the paper said. A spokesman for BA declined comment.

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