March 11, 2020 / 9:19 AM / 20 days ago

Virus-hit Vietnamese carriers cut salaries, encourage unpaid leave

HANOI (Reuters) - Vietnam-based airlines have been forced to cut salaries and encourage their employees to take unpaid leave as carriers struggle with the impact of coronavirus on travel demand, three sources familiar with the situation told Reuters on Wednesday.

Foreign tourists wear protective masks and walk on the empty The Huc bridge due to recent novel coronavirus outbreak on Hoan Kiem lake in Hanoi, Vietnam March 11, 2020. REUTERS/Kham

The carriers have recently suspended all flights to China and South Korea and scaled back flights to other international destinations in the wake of an epidemic that has killed more than 4,200 people worldwide.

Tourists from China and South Korea accounted for more than half of the 18 million foreign visitors coming to Vietnam last year.

“Vietnam Airlines has to take necessary steps to cut costs, including reducing salaries for senior positions and encouraging employees to take unpaid leave,” one of the sources said.

A second source said salaries for senior positions at Vietnam Airlines HVN.HM, the country’s flag carrier, have been cut by at least 20%.

Vietjet Aviation VJC.HM has told its flight attendants to take at least one week of unpaid leave each month, two employees of budget airline said under the condition of anonymity.

Shares of Vietnam Airlines have fallen 33% so far this year, while Vietjet Aviation has declined 27%.

Duong Chi Thanh, Vietnam Airlines chief executive officer, told local media late last month that 40% of the company’s fleet of 100 aircraft had been laid idle due to the virus, directly affecting 20,000 of its employees.

The Civil Aviation Authority of Vietnam has said local airlines would lose up to 25 trillion dong (836 million pounds) in revenue in the first quarter this year.

Vietnam Airlines and Bamboo Airways were unable to provide immediate comment. Vietjet declined to comment.

Vietnam’s coronavirus cases rose to 35 on Wednesday, the Ministry of Health said.

Reporting by Khanh Vu and Phuong Nguyen; Editing by James Pearson and Louise Heavens

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