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Virgin Atlantic cuts chief’s pay to help offset hit from coronavirus

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Via Financial Times

Virgin Atlantic is cutting the pay of its chief executive by 20 per cent for four months as it becomes the latest airline to take emergency measures to protect profitability as the coronavirus continues to hit passenger demand.

The British carrier on Wednesday said chief executive Shai Weiss had agreed to reduce his pay between April and July, while its executive leadership team would take a salary cut of 15 per cent.

Virgin Atlantic’s move comes as airlines around the world are freezing recruitment and slashing the number of flights in the wake of the spreading virus.

The International Air Transport Association, the airline trade body, will on Thursday significantly increase its estimate of the hit to global sales from the virus. Just 13 days ago it estimated a near-$30bn impact, but this was based largely on the impact in Asia.

The Financial Times reported on Wednesday that Virgin Atlantic had suffered a 40 per cent drop in customer demand compared with March 2019, in a sign that the virus is hitting demand for long-haul flights, not just short-haul flights in Europe.

European airlines have stepped up flight cancellations in recent days, with British Airways slashing more than 400 flights between March 16 and 28 to countries including Italy, Germany and the US.

Ryanair has also cut short-haul flights to Italy by up to 25 per cent between March 17 and April 8, while Lufthansa and easyJet reduced capacity last week.

On Wednesday, Hungary-based carrier Wizz Air said it would cut its flight schedule, mainly to Italian destinations, over the coming month.

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The low-cost airline said it would also consider a further 10 per cent capacity reduction in the quarter beginning in April, depending on how much further demand is lowered by the spread of the virus.

Wizz has already cut overheads, relocated staff and implemented a hiring freeze in an attempt to keep down spending.

Virgin Atlantic says it will delay the start of its London Heathrow to São Paulo service, which was due to start on March 29, until the winter season with services beginning from October 5.

The carrier has already suspended its London Heathrow to Shanghai service until April 19 and reduced the frequency of its Hong Kong route.

The airline is also freezing recruitment and offering ground-based employees unpaid leave of between one to two weeks to be taken before July 31. It has further proposed to defer annual increases from March until August, when it will reassess affordability.

Virgin Atlantic said: “As with airlines around the world, Virgin Atlantic is feeling the impact of Covid-19 and seeing a fall in customer demand for travel.

“We are taking appropriate measures and focusing efforts on ensuring that the airline is in a robust position to weather the storm, minimising the impact of the virus on Virgin Atlantic and Virgin Holidays.”

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Additional reporting by Myles McCormick

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