Jet Airways, which is yet to resume operations under its new owner, will reduce salaries for various staff and send many employees on leave without pay, amid uncertainty over resumption of its operations.
The measures, which will be effective from December 1, were revealed hours after the winning bidder Jalan-Kalrock Consortium (JKC) said it might take “difficult” near-term decisions to manage cashflows.
The once-storied airline shuttered operations in April 2019 and JKC’s resolution plan was approved under the insolvency process by the National Company Law Tribunal (NCLT) in June last year. However, due to various issues, the airline is yet to restart operations.
The pay cut would be up to 50 per cent and the quantum would be higher for the CEO and CFO. The temporary pay cuts and Leave Without Pay (LWP) for the affected staff would be effective from December 1, a source close to the development said.
In a series of tweets, Jet Airways CEO Sanjiv Kapoor said less than 10 per cent of the total staff would be on temporary Leave Without Pay and one-third would be on temporary pay reduction.
According to him, “two-thirds of staff (are) not impacted at all” and no staff has been asked to go.
“… with the ownership transfer timeline slipping due to factors outside our control, some temporary hard decisions had to be taken,” he said, adding that the team working to revive Jet Airways was not responsible for the airline running out of cash and suspending operations.
Jet Airways has around 250 staff.
The latest development also comes against the backdrop of Kalrock Capital’s promoter Florian Fritsch coming under the lens of regulatory agencies in Liechtenstein, Switzerland, and Austria.
Besides, last month, the National Company Law Appellate Tribunal (NCLAT) directed the consortium to pay the unpaid provident fund and gratuity dues of employees of the carrier.
Earlier, it was planned that the airline would be launched in October 2022.
“… while we await the handover of the company as per the NCLT process, the longer-than-expected time being taken for the same may result in some difficult but necessary near-term decisions to manage our cashflows to secure the future while the airline is still not in our possession,” the JKC said in a statement.
Without elaborating on the decisions that could be taken to manage the cashflows, the consortium said it has not breached any term of the resolution plan and remains committed to the airline’s revival.
It also said significant progress has been made to relaunch the airline.
“After the NCLT’s approval, all conditions precedent, as outlined in the resolution plan, were completed by May 20, 2022, and the necessary filings in this regard were made before the NCLT on May 21, 2022.
“JKC has deposited Rs 150 crore as required under the court approved resolution plan with the lenders, with the remaining amounts to be invested only after next steps of NCLT are fulfilled in terms of handover of the company to us,” the statement said.
Ankit Jalan, Board Member of the JKC, said the revived Jet Airways will also provide additional career opportunities, including for the airline’s former staff who currently make up more than 60 per cent of the current workforce, and for many more as the revived airline grows.
In the statement, Sanjiv Kapoor said the airline has LOIs (Letters of Intent) in place for aircraft, engines, IT systems, ground handling services, catering, call centre, and all of the other services required to run an airline.
Last month, the NCLAT directed the consortium to pay the unpaid provident fund and gratuity dues of employees of the carrier.
The appellate tribunal had also directed the former resolution professional of the airline to “compute the payments to be made to workmen and employees within one month from today” and communicate the same to the consortium to take steps for the payment.
Shares of Jet Airways closed nearly 1 per cent lower at Rs 76.85 on the BSE on Friday.