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Mumbai/New Delhi, June 22

Air India is targeting a reduction of almost 17 per cent or Rs 500 crore of its annual wage bill of more than Rs 3,000 crore. The airline is passing through a severe financial crisis, losing almost Rs 15 crore a day.

A four-member committee has been constituted to go through all the wage agreements negotiated so far. It will seek to achieve the three-pronged objective of improving productivity of employees, eliminating restrictive work practices, and reducing wasteful expenditure. The committee includes members from the human resources and finance departments.

The restrictive work practices include some areas where the job which could be completed by one person is done by two or more persons as the current rules allow. This leads to a lopsided wage structure for an airline where salaries and wages constitute 35 per cent of the total operating costs.

The committee has been asked to submit its report by July 15 to the Chairman and Managing Director who would be free to implement the decisions without seeking approval of the Board of Directors or the Ministry of Civil Aviation, a senior official said.

“Each and every agreement, be it the productivity linked incentive scheme or flying allowances, will be scrutinised.

“The committee is likely to make some recommendations that could be implemented immediately while others may take some time. Therefore, it is difficult to estimate what the saving is going to be in this fiscal or the next,” said the official. Sources also indicated that while the exercise could lead to some reduction in salaries, there will be no retrenchment.

Meanwhile, the various airline unions with whom the agreements will have to be renegotiated told Business Line that so far there had been no communication to them on the proposed move.

The airline has already initiated steps to cut its costs. This includes delaying the payment of June salaries by 15 days to all its 31,500 employees. In addition, officials above the rank of General Manager have been requested to voluntarily give up their July salary.

The other measures being considered include deferring the delivery of some of the 62 Boeing and Airbus aircraft that the airline is still to take delivery and cutting back on loss making routes.

The airline incurs an expenditure of close to Rs 9,000 crore on interest on these deliveries alone.

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