AI to bite the bullet
State–run Air India (AI) is all set to bring in salary cuts as it tries to wriggle out of its staggering losses. A senior Air India official told Hindustan Times that it (AI) would resort to ‘renegotiation of the Performance Linked Incentive (PLI)’ is paid to employees as part of salary.business Updated: Jul 05, 2009 23:54 IST
State–run Air India (AI) is all set to bring in salary cuts as it tries to wriggle out of its staggering losses.
A senior Air India official told Hindustan Times that it (AI) would resort to ‘renegotiation of the Performance Linked Incentive (PLI)’ is paid to employees as part of salary.
PLI is a component of the salary and varies between 20 to 50 per cent of an employees’ salary depending on seniority or the class of employment.
“When times were good PLI was negotiated in good faith. Now that the airline is going through the worst financial phase PLI could be renegotiated,” the official said, who did not wish to be identified.
A reduction of PLI could mean wage bill of the airline that is now Rs 3500 crore per year going down by 15 to 20 per cent or which would mean an yearly saving of Rs 525 crore to 700 crore.
The PLI scheme was launched in 1996 to prevent the exodus of employees to other airlines. It is applicable to all employees except pilots and cabin crew who earn a flying allowance.
The airline also plans to restructure and relocate employees to enhance productivity.
“As a part of cost cutting exercise the airline could reduce staff from offices that are over staffed. Some non-productive offices are expected to be shut and staff from these offices would be relocated to areas that are short staffed,” the official added.
Air India chairman and managing director Arvind Jadhav, in a communication with employees who had resorted to a token strike on July 3 following delayed payment of salary for the
month of June, had warned them of “harsh decisions.”
The airline which has losses to the tune of Rs 6,000 crore has sought a bail package from the government to tide over the crisis. The airline has an employee to aircraft ratio of 210 employees per aircraft while the global standard is about 150 to 160 employees.