Troubled airline British Airways said Tuesday it was exploring options to raise new funds, as its under-pressure board faced sharp opposition over controversial cost-cutting measures.

BA chairman Martin Broughton, addressing the company's annual general meeting in London, said the airline was looking at issuing bonds as a way of increasing cash reserves.

Meanwhile chief executive Willie Walsh said the company's policy of slashing thousands of jobs and asking staff to take pay cuts and even work temporarily for free was "essential" for the airline's survival.

Outside the meeting, 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).

However the GMB union, representing BA baggage handlers and check-in workers, said Tuesday that its members had opposed 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.

"The world's major airlines are now facing up to the need to add more liquidity to their balance sheets to give them sufficient lift to weather the current storm," Broughton told shareholders on Tuesday.

In a bid to raise BA's liquidity, Broughton said the group was in talks with institutional investors about the possibility of issuing of bonds that can later be converted into shares.

BA finds itself in trouble after recently posting an annual loss of 375 million pounds (438 million euros, 612 million dollars), 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.

"There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base," chief executive Walsh told shareholders on Tuesday.

"These changes are essential to our short-term survival and, more importantly, to our long-term viability."

The British Airline Pilots Association on Monday said 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.