UPDATE 4-BA mulls convertible bond to boost balance sheet

* Rules out rights issue at current time, AGM told

* Defends protests on cabin crew pay, says keen to negotiate

* CEO says would not accept less than 53 pct of BA-Iberia

* Pension deficit worse; eyes revised funding plan

* Stock up 1.3 pct, outperforms FTSE 100

(Adds further CEO quotes from AGM, detail)

By John Bowker and Matt Scuffham

LONDON, July 14 (Reuters) - British Airways (BAY.L) said on Tuesday it was considering launching a convertible bond, not a rights issue, to shore up a balance sheet ravaged by the global aviation sector downturn.

BA Chairman Martin Broughton told shareholders at the group's annual general meeting that the timing was not appropriate for a rights issue, but the airline was looking at other options to improve its balance sheet.