March 4, 2020 / 2:54 PM / a month ago

Virgin Atlantic to cut costs as coronavirus hits demand

FILE PHOTO: A Virgin Atlantic Boeing 747-400, with Tail Number G-VROC, lands at San Francisco International Airport, San Francisco, California, April 16, 2015. REUTERS/Louis Nastro

LONDON (Reuters) - British airline Virgin Atlantic said it would reduce costs to help withstand the impact of coronavirus on travel demand, including a temporary pay cut for its chief executive and a proposal to defer annual pay increases.

Flight bookings have slumped in recent weeks as people worry about the rapid spread of coronavirus, also known as Covid-19, prompting many airlines to cancel flights and reduce their cost bases.

Virgin said in a statement on Wednesday that its CEO would take a 20% pay cut for the four months April-July, with other leadership executives agreeing to a 15% decrease.

The airline has also proposed a deferral of annual pay increases for staff from March until August 2020, plus restrictions on non-essential staff travel, a company-wide recruitment freeze and options for some staff to take unpaid leave.

“Virgin Atlantic has faced previous adversity and challenges over the years and through these sensible steps we will ensure that we are in a stronger position once the impact of Covid-19 stabilises,” the company said in a statement.

It also said it would delay the launch of a new route to Sao Paulo, Brazil from March until October.

Virgin Atlantic is 51% owned by Richard Branson’s Virgin Group and 49% owned by U.S. airline Delta Air Lines.

Reporting by Sarah Young, Editing by Paul Sandle

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