Aurigny will furlough 170 of its staff.
The airline said that although the States of Guernsey agreed to extra overdraft facilities for the company in March, its timetable had 'dwindled' to a minimal lifeline service during the pandemic.
Aurigny needs staff in flying, support and airport roles to meet Civial Aviation Authority regulations, however these will only receive 80% of their normal basic pay.
Staff who are not working during this time will be furloughed and asked to accept their pay being reduced to 70% of their basic pay. These members of staff will continue to attend work for training purposes (such as pilots who need to maintain flying hours) or to cover sickness.
The company says the measures will save around £450,000 per month.
Aurigny Chief Executive Mark Darby said he too would be taking a pay cut, but was aware of the impact it would have on some employees.
The company says furloughing staff means they will be able to recommence normal service once restrictions have been lifted.