The latest airline to feel the pinch of rising crude prices and falling rupee value is Jet Airways. The airline has informed its employees that they will have to take a 25% salary cut due to rising operational expenses. The salary cut is from 5% for employees earning Rs 12 lakh per annum to 25% for employees earning up to Rs 1 crore. Salary cuts for pilots are going to be in the range of 17%.
The airline has an annual salary bill of Rs 3,000 crore. The salary cut is expected to reduce this expenditure by around Rs 500 crore.
An official said that very few details are known as of now. It is not known how long this will carry on for. Moreover there's no clarity on whether there will be a refund of the reduced salary later. The salary cut from managers to CEO will be implemented from this month, the official said. There have been meetings of employees with top management regarding the pay cut and meetings are set to continue.
Jet Airways confirmed the news and said, "As part of its cost rationalisation measures, the airline continues to evaluate all initiatives to achieve greater business efficiencies. Payroll is one of the important components of cost structure and the senior leadership has undertaken a reduction in salary to lead by example."
Such a drastic step is not unheard of. Last year, too, Jet Airways informed junior pilots to take a pay cut of 30% in August.
Industry experts believe that the situation is only going to worsen in the second quarter. The rising fuel costs and exchange rate have put the industry in much stress.
The move to cut salary has not been taken well by pilots. The industry is already facing a deficit of pilots, mostly commanders. As such, other airlines are paying plump remuneration to pilots.
Jet Airways saw profits in two consecutive years - fiscal 2016 and 2017 - but saw losses of Rs 76 crore in FY 2018. The airline is not alone in this. IndiGo reported a 97% drop in profits in the April-June period from the year-ago quarter.
(Edited by Anwesha Madhukalya)