Hyderabad / New Delhi: Beleaguered national carrier Air India will this fortnight put the final touches to a plan to cut costs so that it can get a further infusion of equity capital from the government.
The airline plans to reduce the salary of each of its more than 30,000 employees by 15-17%, according to two senior government officials who asked not to be named.
The national carrier is seeking a government bailout of Rs5,000 crore, of which Rs800 crore has already been cleared. Another Rs1,200 crore was denied last month and the matter referred to the cabinet. The government wants Air India, run by National Aviation Co. of India Ltd (Nacil), to cut costs by about Rs2,000 crore before it gets additional equity.
Moves to cut wages in the past have led to strikes and the airline plans to seek cabinet approval before taking any such measure now.
Wages account for 18% of Air India’s expenses. “There is no proposal for a VRS (voluntary retirement scheme),” one of the officials said, adding that the employees themselves have been open to a mutually agreed settlement given the parlous finances of the airline. Air India’s chairman and managing director Arvind Jadhav said the airline will cut wages only after the consent of “stakeholders”.
The airline is presenting a proposal to the civil aviation ministry, which will conduct a two-day review from 15 March after which a final proposal will be sent to the cabinet for discussion.
The cabinet is likely to discuss the Air India issue after the Budget session of Parliament.
Meanwhile, a parliamentary panel, in a report released on Wednesday, called for an “independent regulatory authority” for the civil aviation sector. The standing committee on transport, tourism and culture also noted: “The turnaround of Nacil is not possible by shifting the burden of the crisis to the shoulders of the employees...”
It recommended writing off Nacil’s losses.