The University of Manchester has warned it is facing losses in excess of £270 million next year if students cancel their studies due to Covid-19.

Vice-chancellor Nancy Rothwell has told staff that job losses and pay cuts may be required, as well as “rapid and radical changes to our university and the way we operate”.

The university’s stark warning chimed with alarms sounded by universities in Australia, many of which have introduced pay cuts, closed down campuses and are seeking voluntary redundancies to mitigate financial losses in anticipation of a sharp drop in international student numbers.

Rothwell’s announcement followed the publication of a report by the UK’s University and College Union, which indicated that the country’s higher education sector could next year lose some £2.5 billion in tuition fees – and this could lead to 30,000 university jobs being lost.

The University of Manchester is preparing for up to an 80% reduction in international students, many of whom hail from China, and a 20% decrease in pupils from the UK and Europe, because “they may be unable or unwilling to travel, face financial hardship or simply wish to defer until there is more certainty,” said Rothwell.

Like many other institutions in the UK’s marketised higher education sector, the University of Manchester is, to a substantial degree, reliant on income from lucrative international students, who pay tuition fees that can be three-times higher than that of their domestic counterparts. One in eight of the university’s students is Chinese. Covid-19-induced international travel bans have prevented hundreds of thousands of students from China and elsewhere from returning to their overseas universities, and thrown into flux prospective students’ future study abroad plans – raising serious questions at institutions that depend on international students to exist.

Rothwell noted the knock-on effects of a drop in student numbers, which, she said, would hit other parts of the higher education sector supply chain, including student housing, catering and other commercial activities.

She said that losses “may persist into following years”.

“For our university, this could amount to a loss of over £270m in one year. Thus, we are preparing for a reduction in our total annual income of between 15% and 25%,” said Rothwell. “We will need to cut our costs very significantly.”

Many universities in the UK and elsewhere have already incurred additional costs in recent months related to Covid-19, as those without robust online channels spent millions of pounds setting up digital infrastructures to enable them to continue teaching throughout the pandemic. According to Sir Tim O’Shea, the former vice-chancellor of Edinburgh University, only around 20 of the UK’s some 130 universities are in a good position to deliver high-quality online courses. He told The Guardian that “most universities” would have had to spend at least £10 million to create “five or six” online degrees in various faculties – costs that would total “well over” £1 billion across the sector.

Last week, it was reported that the UK Treasury was resisting calls from the country’s universities for a £2 billion bailout, a development that stoked fears of bankruptcies in the higher education sector.