Air India (AI) on Wednesday pared incentives to its senior staff, but left the strike-prone general staff untouched. The loss-making airline’s board approved a cut in productivity linked incentives (PLI) of about 7,000 executive-level employees, including pilots, engineers and executive cabin crew.
A statement from the Indian flag carrier late on Wednesday said the cut, applicable to all officers in various management disciplines, will range from 25% for those getting PLI of Rs 10,000 or less and 50% for those receiving PLI or flying-related allowances of Rs 2 lakh or more a month. The reduction for those receiving PLI of Rs 10,001 to Rs 25,000, Rs 25,001 to Rs 50,000 and Rs 50,001 to Rs 2 lakh will be 35%, 40% and 45%, respectively. The cut will be effective from PLI payable in August 2009, AI said.
However, the airline, wobbling under a debt of Rs 16,000 crore, deferred plans to announce a 30-50% cut in PLI for about 24,000 of its class-III and IV employees, who are either general administration or ground-handling staff. Air India has a staff strength of 31,000. In the general category, PLI ranges from Rs 2,000 to Rs 10,000 a month.
The airline said the board had accepted the recommendations of the committee, headed by Anup Srivastava, director-personnel, that reviewed the PLI structure.
An across-the-board cut in PLI would have saved the airline 30%, or over Rs 1,000 crore, of its annual wage bill of Rs 3,600 crore. But its board has deferred a pay cut for the general staff, fearing a backlash from the unions, which have consistently resisted any wage reduction. It is widely believed that the unions would have resorted to a strike had the PLI cut been implemented for the lower-rung staff. It was not clear how the airline’s higher-rung staff, affected by Wednesday's decision, would react. A senior pilot said the board's decisions have not yet been communicated to them.
Earlier this month, pilots of private carrier Jet Airways have resorted to mass sick leave for five days in a tiff with the management over the sacking of two pilots for forming a union. The airline took a hit of a least Rs 10 crore each day of the strike, according to estimates.
Air India unions say that the management should take other routes to turn around the company than reducing employee wages. Arvind Jadhav, the ailing carrier’s CMD, has earlier held meetings with the unions representing the general category to convince them about the need to take a cut in PLI.
However, there has been no positive response from unions so far.
AI, which made losses of Rs 7,200 crore in 2008-09, proposed in early August a revival plan that included restructuring of its Rs 16,000-crore debt with a government guarantee, deploying low-cost subsidiary Air India Express on domestic routes and improving on-time performance of the carrier.
On Tuesday, Jitendra Bhargava, AI’s executive director (PR), said, “The management has, in the wake of the financial crisis affecting all airlines in India and abroad, taken effective steps to control costs in numerous areas, including: procurement of material, reduction in interest liability, rationalisation of routes, savings on fuel, closure of offline offices, recall of India-based officers posted abroad, reduction in lease rentals of aircraft, curtailment of foreign travel by employees and vacating leased premises in India and abroad.”
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