The struggling national carrier’s salary bill was about Rs 230 crore per month till April. “The reduction has come through various initiatives carried out by the airline. These initiatives will continue till normal operations resume,” said an Air India official, who did not wish to be identified.
Officials said Air India managed to reduce its salary bill drastically through up to 15% pay cuts of employees, reduction in flying allowance to pilots and removal of people on contract after retirement.
“Pilots’ salaries were fixed at 70 hours of flying earlier, which has now been reduced to 20 hours. Since there are limited international flights, the airline does not have to pay layover allowance to cockpit and cabin crew. On top of it, the airline has let go of about 250 people, who were retired but were serving on contract,” said the official.
When contacted, Air India confirmed the move and said it has been able to “save a good amount on its wage bill from Rs 229.75 crore in April to Rs 120 crore in September”.
Besides these initiatives, Air India provided an option to employees to go on leave without pay but that did not find many takers.
As the government plans to sell Air India, the carrier has been trying to reduce its costs. Already, it has reduced costs by about Rs 1,500 crore per annum.
The airline needs to reduce costs to survive, as the government is not keen on providing any more equity support to the financially crippled airline.
ET had reported on July 12 that the aviation ministry had refused Air India any more equity support to fund its losses aggravating its poor financial situation. On August 6, ET reported that Boeing had suspended replacement of faulty parts in Air India’s Dreamliner fleet due to non-payment of dues.
The government, which failed to get any bids for the national carrier in 2018, called for bids again in January this year and is discussing changes in the offering to draw prospective buyers. ET reported on August 14 that Tata Sons had started due diligence of Air India and might consider bidding for the carrier.
The government plans to sell its stake in Air India, Air India Express and 50% of ground-handling company AISATS. The government had reduced the airline’s debt to Rs 23,286 crore from Rs 62,000 crore in order to make it more attractive to suitors.