AI told to implement massive salary cuts even in face of unrest

New Delhi: The government has asked loss-making Air India to carry out massive salary cuts even in the face of industrial unrest, while saying any financial assistance to the national carrier will be linked to a credible revival plan.
The group of ministers (GoM) set up last year to review Air India’s revival plan said the next round of equity infusion to the tune of Rs 1,200 crore would happen only after the successful conclusion of salary negotiations with trade unions, according to an official document in ET’s possession.
The troubled airline is seeking an equity infusion of Rs 5,000 crore by the government to boost its debt-raising capacity. The government has already given Rs 800 crore to the airline as temporary financial assistance.
The GoM, led by finance minister Pranab Mukherjee, wants the airline to bring the salaries at par with those in private sector rivals. Air India chairman and managing director Arvind Jadhav has called a meeting of employee unions on Thursday to negotiate wages.
The airline’s wage bill of over Rs 3,000 crore annually for about 31,000 employees is 17% of the airline’s total operating expenses. Air India’s management said the average salary of Air India staff is 15-20% higher compared with their counterparts in rival carriers Jet Airways and Kingfisher.
Mr Mukherjee said at the GoM meeting held on February 3 that no slippage in cost-cutting and revenue enhancement targets will be acceptable to the government. He has also asked the airline to present a credible revival plan before the Union cabinet at the earliest. The GoM is expected to review the airline’s cost-cutting exercise next month.
24/02/10 Nirbhay Kumar/Economic Times

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Categories: NACIL Feb 2010