British Airways has declined to comment on reports that it has received shareholder backing for an emergency rights issue of up to £500 million.

Willie Walsh is understood to have approached a dozen of the airline’s largest institutional investors about raising capital should its trading deteriorate further.

The investors agreed unanimously at the meeting held at the offices of its broker, Merrill Lynch, at the end of last month.

The right’s issue would be seen as a last measure. BA’s losses last year slumped to a £401 million loss, its heaviest since 1982.

The news comes ahead of what is expected to be a tense AGM tomorrow. Unions, lead by Unite and GMB, cite Walsh’s cost-cutting drive as “an opportunistic use of the recession” to cut jobs and salaries.

Meanwhile one BA HR manager admitted to unions that the airline is looking to replace existing cabin crew with new staff on salaries as low as £11,000.

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

The row, which is being mediated by Acas has left the threat of a potentially damaging summer of strikes.

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.