Jet Airways faces crisis as employees reject 25% pay cuts
Cash-strapped Jet Airways has asked its employees, including pilots, to take salary cuts in the range of 5-25% for an indefinite period as it struggles to stabilize operations. Unsurprisingly, they have refused. Pilots have said that at a time demand is high, they can easily join rivals if the cut is forcefully imposed. Notably, Jet hasn't posted a profit for 11 years, barring twice.
Jet had cut salary by upto 50% only last year
This direction comes after the airline imposed a 30-50% cut on 350 junior pilots last August, telling them they could leave if it was unacceptable. Now it has proposed cuts of 5% for employees earning up to Rs. 12L annually, and 25% for those earning Rs. 1cr and above. But there's no clarification on till when, or whether the money will be refunded later.
Jet expects 17% reduction in salary bills with pay cuts
With this move, Jet aims to slash its Rs. 3,000cr salary bill by Rs. 500cr. In FY18, it incurred employee costs of Rs. 3174.22cr, up from Rs. 2,532.33 of FY16. Meanwhile, revenues grew at just 4.8%, FE reports. The senior management has already taken pay cuts, officials said. It has now told employees it has finances to run operations for only 60 days.
Pilots have threatened to join rivals if cut imposed
Pilots, backed by the union National Aviator's Guild, have vehemently refused. "This move could backfire as senior pilots and captains are in demand and many may leave the airline," said one of them. As an incentive, the airline has waived a mandatory seven-year bond which first officers need to sign during appointment, but it hasn't changed their stance. 2,000 of Jet's 16,000 employees are pilots.
Meetings ongoing to resolve differences
Engineers too have outrightly rejected the proposal in cuts, reports said. The management is now holding talks with employees and stakeholders - they met yesterday too and are to meet today - to resolve the issue.
Jet has a gross debt of Rs. 8,424cr
The airline has blamed fuel prices hikes, eroding market share and lack of expansion as factors behind its weak finances. In the last FY18 quarter, it posted a loss of Rs. 1,040cr. The airline has a gross debt of Rs. 8,424cr. In the last 11 years, it has posted profits only in FY16 and FY17. In all likelihood, many employees could lose jobs in the near future.
