Crisis-hit BA is set to slash business class

The news came as the airline admitted it is looking to tap the City for new funds, likely to be hundreds of millions of pounds, as it further conceded its pension-scheme deficits are running out of control.

Chief executive Willie Walsh, who has continually told staff and shareholders that the flag carrier is in a "fight for survival", admitted today at the company's annual meeting in London that the aviation industry recession is likely to last until 2012, and that many of its lost business-class passengers will never return.

At a briefing after the meeting, Walsh said the airline, which has been losing more than £3 million a day, is implementing plans to cut one in four business-class seats on some its long-haul services, traditionally the cash cow of the airline.

Analysts believe that with BA's so-called premium-paying passenger numbers down by 16% this year, the airline could axe business-class seats altogether from its loss-making short-haul services.

Walsh said that will not happen on its Heathrow flights but conceded it might happen on other services. Asked specifically about cutting short-haul business class on Gatwick flights, Walsh said: "It is a possibility."

He refused to comment on how much money the airline will have to raise from City investors after chairman Martin Broughton said it is looking to raise cash via a convertible bond issue.

Broughton ruled out a rights issue because of "a number of key issues that need to be resolved over the next 12 months".

Walsh said the airline would be able to get away a convertible bond - debt which can convert into shares at a later date - irrespective of fears over summer strikes, whether BA advances on its attempts to merge with Spanish airline Iberia, or its pension fund deficit.

The black hole in BA's pension funds is now reckoned to total £3 billion.

"The deficits are huge and in the current climate the company will not be able to afford to increase its contributions," said Broughton.

"To make up the shortfall the company and the trustees must agree a revised funding plan."

Walsh was pilloried during the shareholder meeting for his "failed strategy" and for "talking down the airline".

He arrived to be greeted with workers' placards stating: "Willie, time to head to the departure gate."