Virgin Atlantic, which has said it could cut up to 1,200 jobs because of the recession, awarded its senior managers a 40 per cent pay increase last year.

Staff have accused Steve Ridgway, the chief executive, of a lack of moral leadership after his salary rose from £500,000 to £700,000. The combined pay of the top three directors rose from £1.4 million to £2 million, according to company accounts.

Virgin’s cabin crew received a 4.6 per cent increase last year and all staff have had their pay frozen this year. The airline, which is controlled by Sir Richard Branson, said on Wednesday that there could be up to 600 job losses on top of 600 announced earlier this year.

A Virgin Atlantic spokesman said that the directors’ pay rises were based on a surge in profits during 2007-08 because the company defers performance bonuses by a year. The airline said in May that its 2008-09 profits had nearly doubled to £68.4 million, which implies that directors could be in line for a further increase this year. “The rises were paid last year and have nothing to do with what is happening this year,” the spokesman said. He added that this year’s environment would be more difficult and all staff, including directors and nonexecutive directors, would be asked to make sacrifices.

However, one cabin crew member said: “The moral leadership at the top of this company is non-existent. The very day they were boasting about their profits they were making people redundant.”

Virgin also said this week that it would cut capacity by 7 per cent this winter because of falling demand. British Airways, which has questioned the veracity of Virgin’s results from last year, told staff that Virgin’s capacity reduction raised further questions about its rival’s financial performance. Virgin said BA was trying to deflect attention from its own £401 million loss last year.

Meanwhile, BA faces a showdown with staff over plans to cut allowances, change working practices and cut jobs. Cabin crew are expected to meet on Monday to hear an update from their union on negotiations with the airline.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive