AI must cut staff, perks for bailout

New Delhi: The government wants Air India (AI) to scrap its performance-linked incentive (PLI) scheme and cut the number of staff per aircraft as pre-conditions for bailing out the national carrier reeling under a mounting debt burden, according to a senior official.
AI should downsize or increase the number of planes in operation, said the official who didn’t want either himself or his department to be named given the sensitivity of the issue.
“When we ask them to freeze the PLI, they say there is an agreement with employee unions which stops them from doing so. These agreements cannot be honoured if the company turns sick,” he said citing the example of Singapore Airlines staff, which took a voluntary salary cut during the recent SARS outbreak.
AI has also been advised to take a relook at its aircraft delivery schedule for Boeing and Airbus planes, given the market scenario. Further expansion of capacity at this stage will only lead to more losses, the government feels.
PLI is a major component of the compensation package of 31,000 AI employees. AI pays around Rs 1,400 crore as PLI annually out of its total wage bill of Rs 3,000 crore. AI employs 230 people per aircraft as against 130 employees in the case of IndiGo.
“We have been sending Air India’s bailout plan to the finance ministry, but so far, they have not been convinced,” the official said.
The civil aviation secretary M Madhavan Nambiar is expected to take up the AI issue with Prime Minister Manmohan Singh’s principal secretary TKA Nair soon.
22/06/09 Nirbhay Kumar/Economic Times

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Categories: NACIL Jun 2009