LONDON, England - Troubled airline British Airways said on Friday that it was raising about 600 million pounds (S$1.42 billion) to improve its cash pile.
"British Airways plans to raise 600 million of cash funding to ensure it has strong liquidity consistent with the current difficult trading conditions," BA said in a statement.
After the close of trade on Friday, BA said it would earn 350 million pounds from the sale of bonds to agreed buyers who eventually would be able to convert their purchased debt into shares.
BA's share price closed up 2.95 percent to 136 pence on Friday in London, where the benchmark FTSE 100 index gained 0.62 percent.
Additionally, the trustees of the group's pension fund have agreed to release some bank guarantees back to the airline, allowing it to draw up to 540 million dollars (383 million euros) in cash.
"The above funding is expected to add 600 million pounds of further liquidity to the airline bringing it to a total of approximately two billion pounds," the airline had said early on Friday.
British Airways' chief executive Willie Walsh said the action "puts to bed any suggestion that BA is in any sort of risk short term."
He added: "Relative to competitors, this puts us in a very strong position."
On Tuesday, British Airways had said it was exploring options to raise new funds, as its under-pressure board faced sharp opposition over controversial cost-cutting measures.
At BA's annual general meeting in London held earlier this week, dozens of trade union officials and activists staged a protest and paraded two cages of lemmings to symbolise dissatisfaction at how the company was being led.
About a fifth of BA's 40,000-strong workforce, including pilots, have agreed to accept cuts in pay or to work for free to help the group save millions of pounds (euros, dollars).
But baggage handlers and check-in workers oppose plans to make huge cost savings.
The world's leading commercial airlines are facing a major cash squeeze as the global economic slump crushes demand for air travel.
BA finds itself in trouble after recently posting an annual loss of 375 million pounds, also blamed on high fuel costs.
In a bid to turn around its fortunes, the airline is also slashing capital expenditure by one fifth and cutting 3,700 jobs during its current financial year, which ends in March. BA already slashed 2,500 jobs worldwide in 2008-09.
The British Airline Pilots Association had on Monday said its BA members voted 94 percent in favour of a 2.6 percent pay cut and to reduce some allowances by a fifth to save BA 26 million pounds a year.
Under the deal, pilots' annual pay will be reduced by about 2,000 pounds and 78 positions will be axed.
However in return, pilots who keep their jobs will in two years be eligible to receive a proportion of BA shares worth a total of 13 million pounds if certain company targets are met. The pilots will not be able to sell the shares until June, 2014.
Last month, 800 BA staff agreed to temporarily work for free and thousands more to pay cuts. Walsh and the airline's finance director Keith Williams are working for free in July.
British Airways is meanwhile in merger talks with Spanish rival Iberia. In addition the British carrier is seeking a tie-up with American Airlines.
Last year, American Airlines, British Airways and Iberia signed an agreement to cooperate on flights between North America and Europe to help them overcome high fuel costs.
The move has drawn fierce opposition from Richard Branson's Virgin Atlantic, which claims such a partnership would threaten the survival of rivals.