Airline looking to raise capital
BA could cut more than 25% of its premium seats on some long haul routes as the airline's ceo Willie Walsh predicted a permanent drop in the number of business travellers using them.
Speaking at the carrier's AGM in London, Mr Walsh said the current recession had caused a "structural shift" in the premium market.
He said there would be fewer business travellers flying premium and those who did would be paying less.
He added that "Hanging on in there and just hoping for old high-roller times to return is the road to oblivion."
Mr Walsh indicated that the 70 premium seats in its Boeing 747s operating on the routes to New York, Lagos and Hong Kong could be cut to 52.
The airline is also looking at the possibility of making its flights outs of Gatwick economy class only.
At the AGM, the airline which is currently in talks with the Unite and GMB unions over its plans for 3,700 redundancies, a two year pay freeze and changes in working conditions, there was some heckling from shareholders.
BA executives also faced a small demonstration from GMB members, some with placards calling for Mr Walsh to go.
The talks at the UK arbitration service ACAS are due to resume later this week.
BA chairman Martin Broughton told the shareholders' meeting that the airline was in talks with institutional investors to raise capital, probably through a convertible bond issue.
Mr Broughton said that the airline, which is facing a battle for survival according to the ceo, had ruled out a rights issue.
Mr Broughton said the continuing crisis facing the world aviation industry was the biggest it had ever known.
While the airline still had cash resources of £1bn, its pension deficit had worsened over the last year from £1.7bn to £2.9bn.
It posted a pre-tax loss of £401m for last year.
Mr Broughton said the airline had been frustrated by the slow progress of its merger talks with Iberia which had now been going on for more than a year.
He said he hoped the new ceo, Antonio Vazquez who has taken over from the retiring Fernando Conte would speed things up.
But Reuters reported that Mr Walsh made clear to journalists after the AGM that BA would not accept anything less than a 53% holding in the company controlling the two merged carriers.
The one piece of good news for BA was that it pilots voted to accept a deal their union, Balpa had signed with the airline which will save it £26m a year.
This entails a 2.61% pay cut and a 20% reduction in their flying time allowance.
In return the pilots will, from June 2011, receive BA shares worth £13m if set company targets are reached.
The pilots will not be able to sell their shares for three years.
The package also allows for 78 voluntary redundancies.
www.ba.com www.unitetheunion.com www.gmb.org.uk www.acas.org.uk