British Airways has declined to comment on reports that it has secured shareholder backing for an emergency rights issue of up to £500 million as it fights to secure its future.

Willie Walsh, BA’s chief executive, is understood to have received the support of investors for a capitalraising at a meeting held at the office of Merrill Lynch, the airline’s broker, at the end of last month. Institutions at the meeting are said to have regarded a rights issue as inevitable and were unanimous in supporting one.

BA, which slumped to a £401 million loss last year, its worst loss since 1982, is understood to have told investors though that a rights issue would be a last resort if trading deteriorated significantly.

The speculation, on which BA declined to comment yesterday, comes before what is expected to be a stormy annual meeting tomorrow. The group, which has been hit hard by the slump in the airline industry, is under fierce attack from unions who claim that a planned cost-cutting drive is “an opportunistic use of the recession” to shed jobs.

BA’s plans include losing 3,700 jobs from cabin crew, check-in, administraive and clerical staff, freezing pay for all employees and changing working conditions.

The row, which is being overseen by Acas, the mediation service, has left the threat of a potentially damaging summer of strikes hanging over the company.

Staff anger has been compounded by Mr Walsh’s pay package. Although he is working without pay in July he will receive a 6 per cent increase in pay this year to £743,000. He is also eligible for a bonus of up to £1.1 million that will be paid in shares.

More than 2,500 jobs have been lost at BA in the past year. The airline’s pilots have also agreed to 100 voluntary redundancies.

The GMB union is expected to protest outside the annual meeting. Unite, another union, is to distribute an open letter to the flag carrier’s shareholders outlining its concerns about BA’s plans.

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