It was on September 24 that the AI Board cut the productivity-linked incentive (PLI) up to 50 per cent for all officers, including those in the top management level.
The cut was to be effective from PLI payable August onwards covering over 7,000 of the 31,000 employees (the order has now been kept in abeyance).
The order, if implemented, would result in reduction of 25 per cent in the PLI of those getting Rs 10,000 or less while the maximum cut of 50 per cent was for those who get an incentive of above Rs 2 lakh. Those who get a PLI between Rs 10,001 and Rs 25,000, the cut is 35 per cent, and the reduction is 40 per cent for those who receive between Rs 25,001 and Rs 50,000. Incentive in the bracket of Rs 50,001 to Rs 2 lakh attracts a cut of 45 per cent.
The senior pilots, who are on strike, now get a total monthly salary of Rs 6,30,764, which includes PLI of Rs 5,75,308 for flying up to 80 hours a month.
The loss-making AI spends around Rs 3,300 crore on the monthly salaries of its staff and the PLI itself runs up to a staggering Rs 1,480 crore.
The last week’s decision is a compromise on the earlier proposal from the management for a 50 per cent cut in PLI across the board, something opposed by the employee unions which would have saved the airline over Rs 600 crore annually.
The state-run airline is perhaps going through its worst period with accumulated losses of Rs 7,200 crore. It has borrowings of up to Rs 15,241 crore at the end of June 2009. The carrier has asked the government for a loan and equity infusion of around Rs 15,000 crore.
The PLI cut is a result of a roadmap that Air India’s CMD Arvind Jadhav had laid out in mid-August. Had it gone ahead with the original proposal, the carrier would have saved at least Rs 700 crore a year by cutting the incentives, around 30-50 per cent of employee salaries.
The strike has come as a setback to the roadmap and for the airline’s cost-saving measures.
It will not be a surprise if the strike is followed by those from the executive cabin crew and the executive engineers. The airline is yet to take a decision on the mid-level employees’ PLI.
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