March 19, 2020 / 10:42 AM / 19 days ago

Coronavirus sees India's biggest airline cut employee pay: internal memo

FILE PHOTO: A logo of IndiGo Airlines is pictured on passenger aircraft on the tarmac in Colomiers near Toulouse, France, July 10, 2018. REUTERS/Regis Duvignau/File Photo

NEW DELHI (Reuters) - India’s biggest airline IndiGo has cut the salaries of most employees by between 5% and 20% in response to the coronavirus outbreak, which has paralyzed air travel and dented its revenues, an internal memo seen by Reuters said.

In the letter to its employees, IndiGo (INGL.NS) CEO Ronojoy Dutta said the virus’ impact on the aviation sector has been particularly severe and the company must reduce costs in line with the fall in revenues.

“With the precipitous drop in revenues, the very survival of the airline industry is now at stake. We have to pay careful attention to our cash flow so that we do not run out of cash,” Dutta said. He said he would take a 25% pay cut from April 1.

IndiGo did not immediately respond to an email seeking comment.

The coronavirus has infected more than 218,900 people and caused some 8,900 deaths across the world, triggering emergency lockdowns and injections of cash not seen since World War II. In India more than 165 people have been infected and three have died.

India is planning a rescue package of up to $1.6 billion for the aviation sector, which is likely to include a temporary suspension of taxes.

Dutta said global travel restrictions have resulted in a virtual shutdown of its international flights. Domestic bookings are also around 20% lower, with the situation likely to worsen before it improves.

Indian budget carrier GoAir has asked some staff to take leave without pay on a rotational basis to help it deal with the reduction in capacity.

Vistara, a joint venture between Singapore Airlines (SIAL.SI) and India’s Tata Group, said earlier this week it has not considered sending employees on forced or unpaid leave.

Reporting by Aditi Shah; editing by Barbara Lewis

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