Incentives cuts proposal at Air India draws top management ire

Air India is likely to prune top management salaries to cut costs, despite its failure to cut salaries of pilots in late September. Pilots at the time had struck work for days together, crippling the carrier that ultimately forced the management to revoke its decision.

The airline is likely to decide effecting cuts in performance-linked incentives (PLIs) of functional and executive directors in the board meeting  scheduled for Wednesday according to sources close to Air India.

The board meeting will be followed by a crucial meeting of the group of ministers (GoM) on Thursday to consider the loss making airline's demand for equity infusion of Rs5,000 crore. In its last meeting the GoM headed by finance minister Pranab Mukherjee had asked the national carrier to prepare a detailed cost-cutting and revenue enhancement plan.

The carrier's earlier cost-cutting initiative which proposed to cut PLIs of its nearly 32,000 employees by 50 per cent had to be scrapped on opposition from pilots, which led to a strike that cost the airline Rs100 crore due to cancellations.

According to a source from the carrier, in a mail, the finance director has asked the salary department to withhold PLI of executive and functional directors on 10 November.

The move, which aims to cut PLIs has left the top executives fuming. They say they cannot agree to such decisions and there are hundreds of people whose salaries have not been touched as they have bargaining power. They also point out that they get lower salaries compared to their counterparts in public sector companies.