State-run carrier Air India (AI) has asked all executives at the level of general managers and above to voluntarily forego salary and productivity-linked incentives for July. Earlier this month, Air India had announced that it would defer the salary and incentives of all employees for June 2009 by 15 days.
"The top management needs to indicate to all employees in the organization that every single paisa which can be saved needs to be saved," Arvind Jadhav, chairman and managing director, National Aviation Company of India Ltd (Nacil), said in a letter addressed to corporate directors, section deads, executive directors and general managers. Nacil was formed after the merger of flag carrier Air-India and domestic airline Indian Airlines into one entity that is known as Air India.
A company statement suggests the chairman's move is a "gesture to ease the liquidity crunch faced by the airline." However the savings from executives foregoing their montly salalries will not be more than a single-digit number, according to AI sources .
This is the first time in the history of Air India that salaries payments have been delayed.
Meanwhile 24,000 employees have threatened to boycott work if the management fails to pay salaries on time (which is 30 June). The union leaders have told Business Standard that employees will adopt "no pay no work" policy.
Like every other airline, Air India has been bleeding due to excess capacity, lower yields, a drop in passenger numbers, an increase in fuel prices and the effects of the global slowdown. Its losses have almost doubled to over Rs 4,000 crore in 2008-09 (Rs 2,226 crore in 2007-08) and it is finding it difficult to pay the Rs 350 crore monthly salary bill of its 31,500 employees.
Air India is reportedly seeking a bailout package of Rs 14,000 crore, including equity, special grants and soft loan from banks at 5 per cent interest.
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June 15: Financial crunch forces Air India to defer salary payment
