The crisis at Jet Airways is likely to deepen, as its 2,000-strong pilots are unlikely to agree to a 15% salary cut proposed by the management to save on costs to keep the airline afloat.
“The pilots of the airline will not accept any proposal of the airline management to take a salary cut and the management will have to find other means to cut costs and raise money for the airline,” the spokesperson of Jet’s pilot union, National Aviation Guild (NAG), told FE.
Apart from the pilots, the engineering division of the airline is also not in a mood to accept a salary cut.
“This is not the first time that the management has approached the pilots with an offer to take a haircut, we have witnessed this management tactic since 2008. And what the management said about a 60-day working capital left to run the company is not alarming, as earlier the management in 2008-09 had told us that the airline had working capital for only 15 days,” said a senior pilot with the airline.
The pilots said that if the airline management would still unilaterally go ahead and cut salaries, the pilots will just stick to flying the total number of blocked hours and not do overtime. This essentially means they would just stick to the roster schedules and the airline would not be able to meet its flight schedules, majorly impacting the flights of the airline, as in India, pilots put in overtime due to a shortage of the cockpit crew for most of the carriers. Though Jet has a pilot union, NAG, it is different from the pilot union of Air India that can go ahead with an industrial action and strike work; Jet’s union does not have that power.
Part of the problem for Jet leading to a stressed balance sheet is also because of the carriers selling tickets below the actual cost in order to garner loads, negatively impacting their yields or the money a carrier makes on selling a ticket. Larger carriers like budget airline IndiGo and Jet, which have over 60% of the market share between them, are experiencing losses as the strategy has become unsustainable due to an escalation in fuel costs, which has risen around 27% for the Indian carriers for the first quarter, and also a depreciating rupee that has impacted the maintenance and operational costs for the airlines, as most of these costs are dollar-denominated.
Sources indicated that Jet was in discussion till some time back for selling a 10% stake to one of its current partners, Air France-KLM, but the talks are currently in cold storage. “Jet can get a premium to the current valuations if the partner is a strategic one (an airline),” said the source aware of the discussions. However, Jet on Friday denied any such move.
Jet’s CEO Vinay Dube in a statement on Friday said that the airline has taken several initiatives that are transformative and it will continue with cost-saving and revenue-enhancement measures to create a growth-oriented sustainable future, and that the reports about the sustainability of the airline are factually incorrect.