Virgin Blue, the Australian airline part-owned by Sir Richard Branson, is to cut up to 400 full-time jobs from its 6,000-strong workforce, and reduce executive remuneration as it contends with what it called the most volatile operating environment in commercial aviation’s history.

The airline, which reported a first-half net loss of A$101m (US$65.2m) compared with a A$113m profit last time, said its margins had been hit by a fall in domestic air fares in Australia which had sunk to a 17-year low.