Struggling flag carrier British Airways
BA Chairman Martin Broughton told shareholders at the company's annual general meeting that the timing was not appropriate for a rights issue because the carrier had a number of key issues to resolve in the next twelve months.
However, Broughton said BA was looking at other options to improve its battered balance sheet.
We are in discussions with our institutional investors exploring opportunities in the convertible market, which we believe is the best way of increasing our cash reserves, Broughton said.
A weekend news report had suggested the airline had received support from some of its shareholders for a major rights issue, a move seen by analysts as an absolute last resort.
Broughton said it was clear that deficits in the group's pension schemes would be higher than the 1.74 billion pounds indicated last September.
The valuation of its funds was likely to be down by at least 1.2 billion pounds ($1.95 billion), he said.
The company could not afford to increase its own contribution -- which totaled more than 1.8 billion pounds in the last three years, he added.
It is a sobering thought that this level of contribution is far in excess of our cumulative profits, which have been 1 billion pounds, over the same period, he said.
The company will agree a revised funding plan with pension trustees after a review, he said.
Early exchanges at a packed annual meeting near the Houses of Parliament in central London were dominated by questions on director pay and the airline's attempt to persuade ground staff and cabin crew to accept pay cuts and changes to working conditions.
Director costs are offensively excessive as you try to cut employee costs - many (workers) are on average earnings, one small shareholder said, to applause from the audience.
Chairman Broughton said boardroom pay was lower than at other companies and said he wanted to operate peacefully with staff, while CEO Willie Walsh said talks with unions had made progress.
However, one 20-year BA cabin crew veteran, who declined to be named, said an offer by union Unite of a 2.6 percent pay rise was its best in history.
We don't know what else to do ... Any other CEO in the history of BA would have accepted it. This is a smash and grab (from the airline), he told Reuters.
Shares in the group, which have fallen by almost 30 percent this year, were up 1.3 percent at 128 pence at 1123 GMT (7:23 a.m. EDT). The FTSE blue-chip index <.FTSE> was up 0.69 percent.
(Writing by Matt Scuffham and Paul Sandle; Editing by Rosalba O'Brien and Simon Jessop)