AI will cut wages to save Rs500 cr

Financially in the doldrums, Air India is aiming for a Rs500 crore reduction in employee costs. The annual wage bill for the national carrier is about Rs3,000 crore, of which close to Rs1,400 crore are Performance Linked Incentives (PLI).

In a statement on Monday, the airline said it was setting up a four-member committee to examine wage agreements (in conjunction with employee unions), including flying allowances and PLIs, to achieve the reduction. This committee will submit its report by July 15.

The attempt at wage cost reduction — by approximately 17% — comes on a day when Arvind Jadhav, chairman and MD of AI,  along with senior civil aviation ministry officials, met the principal secretary to the prime minister, TKA Nair. This was after a similar meeting with the cabinet secretary in which the airline top brass outlined the financial difficulties, seeking a hefty ‘bailout’ package. AI is said to be looking for Rs12,000-14,000 crore (in equity and soft loan) from the government.

Sources also said that civil aviation minister Praful Patel has requested a meeting with the PM this week to try and hasten the bailout. Patel is in London and expected to be back on Tuesday.

This meeting is significant since AI has still not submitted a firm proposal detailing cost-cutting measures and the business plan for the next decade. This would have aided in drafting a financial package in the upcoming Union Budget. Given the delay, AI is perhaps hoping for a funds infusion when the Revised Estimates to the Budget are prepared later.