VIRGIN ATLANTIC, the UK airline headed by Sir Richard Branson, is facing industrial action by its pilots after they voted overwhelmingly to reject a pay offer.

About 500 pilots at the carrier are demanding a 30 per cent pay increase to match rates among competing airlines, including Singapore Airlines, which owns a 49 per cent stake in Virgin Atlantic.

Talks between the management of Virgin Atlantic and the British Airline Pilots Association (Balpa) broke up without agreement late on Thursday night after Virgin’s pilots rejected, by a majority of 99.5 per cent, an offer of a 10 per cent increase spread over three years.

A Virgin Atlantic first officer with five years’ experience earns £45,000, while his British Airways equivalent earns £60,000.

An internal Balpa message to Virgin pilots said: “No substantive progress has been made at the all-day meeting, which finally concluded with the company council team (Balpa) inviting the company to very seriously reconsider its position, given the alternative.”

Balpa is expected to hold a final meeting with Virgin Atlantic next week before balloting for strike action.

But a senior Virgin Atlantic source said that the management believed that Balpa was bluffing and was extremely unlikely to call a strike when all transatlantic airlines were struggling after seeing a catastrophic drop in yields.

A Virgin Atlantic spokesman said that the airline made a £90 million profit in the year to April 2002 but was expecting only to break-even this year because of the economic downturn around the world, the war in Iraq and the Sars epidemic.

He said: “We are trying to agree terms which this company can afford in the current climate.

“We are confident there is a deal to de done which involves more productivity and flexibility from the pilots which will be rewarded commensurately.”

He said Virgin pilots at present worked fewer hours than pilots at rival airlines.

“It’s very difficult to compare pay packages for people in different companies,” he added.

Virgin, which flies to 21 destinations worldwide, joined other transatlantic airlines in cutting its prices earlier this month in an attempt to attract back passengers.