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Jet Airways top 200 employees face 30% pay cut

Posted by Yogesh on Tuesday, 21 October, 2008

MUMBAI: India’s largest private airline, Jet Airways, is planning to slash salaries of its top 200 officials by 25-30% in order to battle rising costs. Also, it has not yet decided whether to pay Diwali bonus for this year.

A top Jet Airways official said the proposed salary cuts would affect employees who are earning Rs 10 lakh and above per month. The salary cut may come into effect from next month, the official said, asking not to be quoted. He added that an announcement to this effect is likely on Saturday.

The senior employees likely to be hit include pilots and aircraft maintenance engineers, apart from management and planning officials. The official could not provide the quantum of savings the airline might achieve from the exercise. He said salary costs account for about 12% of Jet’s total operating costs while fuel costs are the highest at 33%.

When contacted, Jet Airways executive director Saroj Datta said: “We will do everything to reduce costs of the company. If necessary, this would also include salary cuts for the top management.”

However, the company has not yet made any decision on this, he added. Jet Airways’ tier I employees enjoy take-home salaries as high Rs 10-15 lakh per month, depending on their experience and positions.

Of its 13,200 employees, around 2,000 earn more than a lakh per month. These employees are mainly pilots and aircraft maintenance engineers.

Jet is also planning to rejig the salary structure of its reinstated cabin crew and other staff by shifting a major portion of their salary to the variable component. Also, the cabin crew is expected to accept a substantial reduction in their flying hours as Jet will reduce flight capacity by 30%.

Jet had reinstated 1,900 employees last week, within two days of laying them off. In 2007-08, Jet Airways’ salary bill had shot up to Rs 1,205 crore from Rs 938 crore in 2006-07.

This was mainly due to the recruitment of pilots, engineers and cabin crew required for the company’s expansion plans. This included a significant number of expatriate personnel.

An analyst told ET that Jet Airways will report a quarterly loss of more than $120 million (Rs 589 crore) for the three months ended September 2008. It had made a profit of Rs 143 crore in June quarter on revenues of Rs 1,983 crore. The board of Jet Airways is meeting on October 25 to consider the financial results.

The Jet Airways stock slipped 11% to close at Rs 217.30 in a rising Mumbai market on Monday. Source The Economic Times

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