Virgin freezes pay as it battles economic challenges

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Virgin Atlantic has imposed a pay freeze for the financial year that began on 1 March as the carrier battles rising fuel costs and a recession-dogged global economy.

The move comes just weeks after new chief executive Craig Kreeger took charge of the Gatwick-based airline with a mission to reverse its fortunes.

In the year to 29 February 2012, the carrier lost £80.2 million ($119 million) and UK media reports over the weekend suggested losses had mounted over the following 12 months.

While declining to comment on its financial performance, Virgin says it has committed to a "plan of measured changes" over both the short- and long-term to address the issues it faces.

"The airline has also made the decision to suspend salary increases for this financial year," it says.

Virgin says the UK airline industry "has faced continued challenges" over the past year, made worse by the UK's Air Passenger Duty tax and the fees levied by the country's airports which it describes as "some of the most expensive airport charges in the world".

It points to its transatlantic joint venture with Delta Air Lines - which in December acquired a 49% stake in Virgin - and its Little Red domestic operation, which will begin flights on 31 March, as key drivers for revenue growth.

Additionally a planned transition to twin-engined aircraft types "will result in considerable financial savings" it says, as it retires its Airbus A340-600s and Boeing 747-400s in the 2015-2010 timeframe.