BAA owns seven UK airports

The Competition Commission has recommended raising charges airlines pay to use Heathrow and Gatwick.

But BAA insists the proposed charging levels are too low and mean a "dramatic reduction in return" for itself.

BAA says it will now be working with its advisors on a refinancing plan, and will consult with leading bondholders.

The Competition Commission proposals mean that BAA might not be able to implement its refinancing plans as envisaged BAA

That consultation will be held under the auspices of the Association of British Insurers.

It comes after the Competition Commission said Heathrow's charges should rise from �9.28 to �10.96 per passenger while Gatwick's charges should rise from �4.91 to �5.48, the watchdog said.

The report also said BAA had failed to prevent new security measures from causing "unacceptable delays".

Ratings agencies

Meanwhile, the Civil Aviation Authority (CAA) has said it would make proposals that "remedy the adverse effects of the airports' conduct".

The CAA is to publish a "regulatory settlement" regarding airports next March, and BAA warns that it "may not be able to finalise" any financing plan until then.

It said: "The Competition Commission proposals, if adopted by the CAA without amendment, means that BAA might not be able to implement its refinancing plans as envisaged."

In the meantime it has said it will, "over the coming months, be working with its advisers and other key transaction parties including the ratings agencies to continue to design a refinancing plan".

Six-month enquiry

BAA has already said that the Competition Commission's funding proposal will make it hard to improve airports.

The commission has drawn up airport charges over the next five years, after a six-month enquiry.

Beyond the 2008-2009 timeframe, the commission recommended that charges at Heathrow should rise in line with inflation, or the retail price index (RPI), plus 7.5% per year, while Gatwick's charges should rise slower than inflation at RPI minus 0.5%.

BAA was bought by Spanish construction business Ferrovial last year. It also owns Glasgow, Aberdeen, Edinburgh and Southampton airports.