AI board okays pay cut affecting nearly a fourth of all staffers

Compromise on earlier, stiffer proposal; more cost savings to follow.

The board of directors of National Aviation Company Ltd, which runs Air India, today approved a productivity-linked incentive (PLI) cut of up to 50 per cent for all officers, including top management.

The cut, approved at its meeting in Mumbai, will be effective from PLI payable for August onwards and over 7,000 of the 31,000 employees will be affected.

The decision is a compromise on the earlier proposal from the management for a 50 per cent cut in PLI across the board, something opposed by the employee unions.

AI’s annual wage bill is Rs 3,100 crore, of which 40 per cent is the PLI component. The earlier 50 per cent cut would have saved the airline over Rs 600 crore annually. Its spokesperson declined to comment on the amount they will now be able to save.

However, sources in the industry say the amount would be much lower now and could also impact the airline’s plan to save Rs 1,000 crore annually.

“The cut, applicable to all officers, including top management personnel, in various management disciplines, will range from 25 per cent for those getting PLI of Rs 10,000 or less per month and 50 per cent for those receiving PLI or flying related allowances of Rs 2 lakh or more per month,” said a release from the airline.

The cut 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 per cent, 40 per cent and 45 per cent, respectively, the release added.

However, the unions fear this could be just the begining of more severe cuts. “As of now, the management has left the unions. But we fear they might come to us with a similar offer,” said Dinakar Shetty, a representative of the ACEU.

After the unions’ opposition to the 50 per cent cut proposal, the management named a committee headed by Anup Srivastava, Director-Personnel, to review the PLI norms and give a report by September 30. The panel gave its report today.

AI is seeking a bailout package in the form of equity infusion and soft loan from the Union government. The latter formed a Committee of Secretaries (CoS) headed by Cabinet Secretary K M Chandrasekhar and also comprising aviation secretary M M Nambiar, finance secretary Ashok Chawla and the Prime Minister’s principal secretary, T K A Nair, to monitor the recovery of the airline on a monthly basis.

The CoS, in its last meeting, asked the beleaguered airline to cut costs aggressively. The airline is also planning to monetise assets by shifting out of the iconic Nariman Point headquarters in Mumbai and Airlines House in Delhi.