BA needs to raise £600m to get help “strengthen its position in the industry,” according to CEO Willie Walsh.

British Airways (BA) has announced plans to raise £600 million in cash to help it cope with the current downturn the industry is facing, amidst the economic crisis.

In a statement issued today (17 July), the UK-based airline, said that it needed to “raise cash funding to ensure it has strong liquidity”.

BA said it was launching a £300m convertible debt issue – existing shareholders will be given the option to take convertible bonds – which would be conditional upon approval at a general meeting.

In addition, it has instigated an agreement with its trustees over releasing funds – through bank guarantees – from its defined benefit pension scheme. The guarantee was set up in 2006 to be accessible by the trustees should the airline face insolvency. This initiative will make a further £330m accessible until 21 June 2012.

Willie Walsh, BA Chief Executive, 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. It also supports our continued investment programme to maintain our position as a leading global premium airline.”

The airline has recently made headlines with its other cost-cutting initiatives, which included asking staff to either work unpaid, or take unpaid holiday and asking pilots to accept a salary cut in return for long-term payback.

BA will publish its full interim management statement for the first quarter on 31 July.

Shares in the airline have risen by 7.7p since trading began today.