Mumbai: Naresh Goyal, founder-chairman of Jet Airways (India) Ltd, in a letter to employees on Tuesday suggested wage cuts next year for those whose gross salary is at least Rs75,000 a month.
Describing the move as “tough measures for tough times,” Goyal did not specify details.
He said in the letter that the carrier’s top management has already volunteered a 25% cut in salary effective from December. He had also met employees in late November to persuade them to agree to a wage cut.
A Jet spokesperson confirmed Goyal wrote the letter.
“I am confident that you will also accept this is in best interests of the company and its continued operations—and continued employment—of all the employees,” Goyal wrote in the letter.
“The decision to cut wages will not have a significant impact on Jet’s bottom line since this will only result in 10% savings on the total employee remuneration cost and the airline is incurring huge losses,” said Vijay Nara, an aviation analyst at brokerage Centrum Broking Pvt. Ltd.
According to the Jet spokesperson, wage cuts for pilots will be a combination of outright reductions and allowance rationalization.
However, a group of Jet Airways pilots, which is in talks with the management, has refused to take any cuts.
A pilot with Jet Airways, speaking on condition of anonymity because he is involved in the negotiations, said some pilots have informed Goyal of their unwillingness to accept reduced pay.
He claimed that though the airline has said that it has stopped hiring, it is still recruiting general managers and vice-presidents. He also claimed that “salaries for foreign pilots are huge compared to Indian pilots”.
The number of employees at Jet Airways increased almost 19% to 13,163 in March from a year earlier. Employee costs increased 28.5% to Rs1,205.2 crore during the same period.
Jet Airways’ shares closed 4.07% lower at Rs122.65 on the Bombay Stock Exchange. The benchmark Sensex index closed 1.14% lower at 8,739.24 points.