NEW DELHI: Jet Airways has informed its employees that the airline will not be able to operate beyond 60 days unless cost cutting measures, which include pay cuts, are put in place, two executives confirmed to ET.
The management team, including its chairman Naresh Goyal, informed employees in face-to-face meetings in recent days in Mumbai and Delhi that the airline’s financials are in a bad shape and drastic measures needed to be taken to cut costs.
The warnings of low cash levels have rattled employees at India’s oldest private sector airline, who have been told in recent days to take up to 25% cut in salaries, and triggered protests.
ET was the first to report about the pay cuts on Wednesday.
Employees are trying to figure out what to make of these warnings with some saying that the situation probably has been exaggerated to make some employees leave.
“We have been informed that the airline cannot run beyond two months and the management needs to cut cost through pay cuts and other means to ensure that it stays afloat beyond that. The airline did not inform us about all this all these years which has dented trust of employees in the management,” said one Jet Airways senior executive who did not want to be identified.
Jet Airways said it is implementing several measures to cut cost.
But the airline did not give specific answer on the 60-day deadline given to employees.
“In line with its stated focus of creating a healthier and a more resilient business, Jet Airways has been implementing several measures to help it reduce cost as well as realise higher revenues, for desired business efficiencies.
Some of these include sales and distribution, payroll, and maintenance, among many others. As part of this approach, the airline management is in dialogue with key stakeholders to enlist their full support and cooperation for realising necessary savings across all parts of the business,” Jet Airways said in a response.
“The airline is committed to create a growth-oriented, sustainable future and a revitalised guest experience armed with the addition of 225 B737 MAX fuel-efficient aircraft which will be inducted in its fleet over the next decade, and of which 11 are slated to join within this financial year. The airline refutes and strongly condemns the speculative comments of/from certain vested interests, who are making deliberate attempts to undermine Jet Airways’ transformation efforts,” it added.
Executives said that the airline has also started firing people across functions and has already asked some people from the engineering department to leave. “In the engineering department, head of line for Delhi has been asked to leave. Job losses will start to happen in functions like cabin crew and ground handling,” executives added.
The airline has also decided to waive the bond terms of seven years or Rs 1 crore for its first officers and the mandatory one year notice period for pilots, including commanders.
The airline’s management team, headed by founder Goyal, met employees in Mumbai and told them that the cut will be for 24 months and that no refunds will be made. On Thursday, the management met employees in Delhi but Goyal did not attend the meeting.
The management has blamed rising fuel prices and major market share gains by IndiGo for its precarious financial position, the executives said. After two consecutive years of profits in fiscal 2016 and 2017, Jet incurred losses of about Rs 767 crore in FY2018. Industry analysts say that it is likely to report a loss of Rs 1,000 crore in the first quarter of the current fiscal.
Jet is not the only carrier to be affected by intense cut-throat competition and rising fuel costs. IndiGo, India’s largest carrier by passengers flown, reported a 91% drop in profits for the first quarter of this fiscal on Monday.