Jet Airways decides against 25% salary cut for employees; staff refuses to bail out troubled airline

Mumbai: Contrary to news reports Jet Airways (India) Ltd won't be going in for a salary cut of its employees. Staff salaries for July were released on Friday, media reports said.

Employees are not in favour of a pay cut to help the airline tide over financial woes faced as it is with several challenges including a surge in fuel prices, a weaker rupee, and intensifying competition.

Last week, the company had proposed up to 25 percent pay cut for employees but the proposal was rejected by pilots and engineers, sources said.

The full-service carrier was in discussions with certain sections of employees on the salary cut proposal, which had been mooted amid efforts to save costs. Not only staff in India, but also the expat pilots would have to take a pay cut, sources tod The Times of India, according to a report.

Jet Airways has more than 16,000 employees.

Salaries of employees were put on hold, according to The Economic Times, but was subsequently released after Chairman Naresh Goyal assured them that there will be no pay cut.

Goyal was present in the company's meeting with employees in Mumbai, a ET report said. He is said to have told employees to 'help him out' and that he would not forget their gesture. He is also reported to have told them that the airline's reputation was hit due to the 'salary cut' report in the media and this had led to increase in cancellations, the report said.

However, the staff refused to comply with his request.

File image of a Jet Airways aircraft. PTI

The Naresh Goyal-led airline, in which Gulf carrier Etihad holds 24 percent stake, has already slashed by 25 percent the salaries of its senior management, one of the sources told PTI in Mumbai. Senior management executives are those holding general manager post and above level positions.

Jet Airways won't be able to fly beyond 60 days unless cost-cutting measures, including pay cuts, are put in place, and it has approached investment bankers again to help sell a stake in the carrier, local media reports said on Friday.

The management team, including Goyal, had informed employees in face-to-face meetings in recent days in Mumbai and Delhi that the airline’s financials are in a bad shape and drastic measures needed to be taken to cut costs, the ET daily reported, citing two company executives.

At a meeting held with Jet Airways' CEO Vinay Dube in Mumbai on 2 August, pilots made it clear that the proposed pay cut was not acceptable.

The management had told the pilots that they should go along with engineers and other employees by taking a 25 percent wage cut due to the prevailing financial health, the source added. Engineers have also rejected the salary cut proposal, it said.

Earlier, Mint had reported that Jet Airways has approached investment bankers again to help sell a stake in the carrier, citing two people with direct knowledge of the matter.

“Jet Airways is looking to raise immediate cash and the transaction may include Jet Airways founder Naresh Goyal offloading a part of the promoter’s stake in the company,” one of the sources told Mint on condition of anonymity.