Four hundred Ryanair pilots and cabin crew will be forced to take one week of unpaid leave this year as the budget airline cuts back flights from Dublin and Stansted.

Michael O’Leary, the chief executive of Ryanair, said the airline’s executives would also receive a pay cut of at least 10 per cent because of the financial difficulties facing the sector.

The unpaid holiday will be imposed on staff at Dublin and Stansted and, based on an average Ryanair salary of €60,000 (£47,000), will cost them about €1,150 each in lost earnings.

Carriers across Europe and the United States are struggling with high fuel prices and an economic downturn, which threatens to wipe out profits and has pushed several into bankruptcy. Mr O’Leary said that he expected only five large carriers to survive the downturn – Ryanair, easyJet, British Airways, Air France-KLM and Lufthansa.

To cope with high costs and lower demand, Ryanair is planning to reduce flights from Stansted and Dublin this winter. Fifteen aircraft will be parked at Stansted, its largest base, and five at Dublin.

In a gloomy assessment of the economic climate in Europe, Mr O’Leary said: “Clearly, the world is going into not just a recession but a depression. We are facing four to five years of recessionary times and that is good for [Ryanair] as everybody will be trading down.”

He is optimistic enough about the aviation sector to continue planning a low-cost transatlantic service, which he said could be up and running in 2½ years if a fleet of new, cheap aircraft could be found.

Ryanair staff are not the only ones suffering in the industry. Aer Lingus, the Irish carrier, is talking to unions about cutting 1,500 jobs, about a third of its workforce. British Airways is set to close its Glasgow base, with the loss of 138 staff. BA said last week that passenger numbers had fallen by 4.8 per cent overall in September and its premium long-haul business had fallen by 8.6 per cent.

Virgin Atlantic said yesterday that its passenger numbers had risen by 3 per cent in the first six months of this year and 6 per cent in Upper Class. The airline increased revenues by 15 per cent to £1.37 billion. Profits rose from £43 million to £72 million.

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