State-run carrier Air India has targeted slashing annual salary costs by Rs.500 crore, it said here Monday.
Air India has appointed a four-member committee to examine existing wage agreements, including flying allowances and productivity-linked incentives, signed with the unions associations and the Indian Pilots Guild.
The committee has been directed to go into all aspects of cost rationalisation and reduction of wasteful expenditure with the unions and submit its report by July 15.
Currently, the carrier runs an annual wage bill of over Rs.3,000 crore.
"Besides reductions in wage cost, AI is also looking at improving productivity of employees, elimination of restrictive work practices and reducing wasteful expenditure," an airline statement said.
Justifying the rationale behind the exercise, Air India said so far it had not resorted to retrenchment or layoffs to tide over the financial crisis arising out of difficult market conditions that have affected airline operators the world over.
The move comes two days after the Air India chairman and managing director Arvind Jadhav appealed to all staff to "rise up to the challenge" and help the airline in its "fight for survival".
In a letter to each employee, Jadhav had said that in view of the global crisis, all carriers have been experiencing low fares, poor load factors, drop in premium travel, decline in cargo load and low yields.
"Employees have been receiving their wages, salaries every month even when people in the industry have lost jobs or seen emoluments take a dip. We should consider ourselves fortunate that we have been insulated from the adverse impact of the economic meltdown so far," Jadhav said.
His letter came after employees threatened to go an indefinite strike from July 1 if their salaries were delayed.
The company, struggling to cope with a cash crunch, had earlier announced that it would defer June salaries. It has also asked the top executives above the position of general manager to forego their compensation for July.