As Jet readies cost-cutting plan, pilots up in arms against 15% pay cut

Jet Airways
Jet Airways pilots are resisting 15 per cent cut in salary, throwing a spanner in the airline's cost saving plan.

The airline has already enforced 5-25 per cent salary cut for its 150 senior-most executives (general manager rank and above), including its chief executive officer. Over the last few weeks, it has also laid off or let go 15-20 senior executives in commercial and operational roles as a part of its overall plans to reduce its non-fuel expenses.

The airline has a debt of over Rs 84 billion and large repayment (of around Rs 30  billion) due in the current year, prompting the management to intensify focus on cost rationalisation. But the airline's plans to reduce salaries by 15 per cent is being opposed by both pilots and engineers.

On Wednesday, Jet Airways Chairman Naresh Goyal and top executives, including its chief executive officer Vinay Dube, met around 100 pilots. A similar meeting is being planned with pilots in Delhi on Thursday to impress upon them challenges faced by the airline and reasons for pay cut.

In the meeting, the management highlighted the challenges being faced by the airline, including rise in fuel price and a weak rupee which is impacting its finances. The airline has $300 million cost-saving target for FY 19. “We need to fix the house. The situation is critical,” the pilots were told.

The pilots, for their part, blamed the airline management for inefficiency and loss, and said employees should not be made to suffer. Some also questioned how the airline was expanding and ordering new planes if its financial situation was so poor.

Jet Airways had a wage bill of over Rs 31 billion in FY 18. Pilots make up little more than 10 per cent of the airline's 16,000 employee force but account for about half of its salary bill. Pilots' salaries are negotiated with the union and next revision is due in 2019.

“The airline can not unilaterally impose a salary cut as it will violate agreement signed with pilots,” a commander remarked. 

The airline posted Rs 10.40 billion loss in the fourth quarter FY 18 as higher operating costs continue to hurt the airline. Jet is targeting 12-15 per cent reduction in non-fuel expenses through renegotiation of maintenance contracts, reduction in distribution costs and the induction of fuel-efficient Boeing 737 Max planes. 

“Jet Airways is committed to creating a competitive cost structure that ensures a sustainable future for the airline and its stakeholders. As part of its cost rationalization measures the airline continues to evaluate all initiatives to achieve greater business efficiencies. Payroll is one of the important components of the airline's cost structure and the senior leadership team has undertaken a reduction in their salary to lead by example,” an airline spokesperson said in an email response.

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