The source said the decision to roll back pay cut proposal was during a meeting addressed by the airline's CEO Vinay Dube with a group of employees late last week.
"The management has taken back the salary cut proposal. It has been rolled back for all employees. Now, we will start negotiations for our bilateral wage agreement," the source said.
Generally, the wage agreement is signed for three years. While the previous pacts expired on March 31 this year, the management is yet to start negotiations for the new agreements, which would be for the period from April 2018 to March 2021, the source added.
Last week, the airline's pilots union NAG said that it was endeavouring to assist the airline in facing the current challenges and help in achieving cost efficiencies.
As part of cost-cutting measures, the Naresh Goyal-promoted full service carrier had asked its employees, including pilots and engineers, to take steep pay cuts besides a downward revision of 25 per cent in the salaries of the senior management.
Senior management executives are those holding general manager post and above level positions.
Amid rising concerns over its financial health and pilots on war path over proposed pay cuts, the airline, on August 3, expressed confidence of overcoming the current issues as it said the mismatch between high fuel prices and low fares is the biggest short-term challenge.