Employees of Jet Airways have to take a pay cut of up to 25 per cent, as the company informed its employees that the cost of operations has risen sharply due to rising crude oil and depreciating rupee.
For those earning Rs 12 lakh annually, salary cuts will be lower at 5 per cent. For those earning Rs 1 crore and above cut will be sharper at 25 per cent.
There is, however, no clarity on how long will this pay cut cycle continue. It has reportedly not been told whether employees will be refunded the difference later. Pilots of Jet Airways will also go through the pay cut.
Jet Airways has a total salary cost of Rs 3,000 crore. It is expected that the total employee cost would come down by Rs 500 crore after the pay cut becoming effective from this month onwards.
The airline was quoted as saying that the senior management has already taken a pay cut. “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,” the airline told the leading newspaper in an email statement.
The rise in fuel costs will also reflect for airlines in the second quarter results, analysts say. Consider this: InetrGlobe Aviation, the parent company of budget-airline Indigo, reported a steep decline of 96.6 per cent in net profit to Rs 27.8 crore in the first quarter of FY 2019. The company said the decline was the result of high fuel prices and falling rupee. Last year the company posted a net profit of Rs 811.10 crore in the same quarter last year.
Jet Airways has been going through a rough patch as in the March-ended quarter it registered a net loss of Rs 1,045 crore compared to a net profit of Rs 601.71 crore in the corresponding period last year.