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Jet Airways to slash employee salaries as takeoff delay bites

The winning consortium for Jet Airways (India) Ltd has rolled out measures to restructure salaries in a bid to secure cash flows amid a protracted delay in resuming operations of the grounded carrier in its second avatar.

While a section of Jet’s total workforce comprising 230-250 employees will see their pay cut by up to 50%, some will be placed on leave without pay until further notice from 1 December, a person familiar with the matter said on the condition of anonymity.

The Kalrock-Jalan consortium, which won a bid to take over the cash-strapped carrier, said it is awaiting a formal handover of Jet Airways as per the process laid down by the National Company Law Tribunal (NCLT). However, “the longer-than-expected time for the same may result in some difficult but necessary near-term decisions to manage our cash flows to secure the future while the airline is still not in our possession,” it said in a statement.

“For now, this will include some temporary tightening of the payroll. In terms of employees, two-thirds of staff will not be impacted at all. Of the remaining one-third, most will be on temporary pay reduction. Only a small portion of the total strength or around 10% will be on temporary leave without pay,” said Sanjiv Kapoor, chief executive for Jet Airways. Kapoor didn’t say till when the new measures will remain in force.

In June 2021, the NCLT approved the resolution plan submitted by Kalrock Capital and UAE-based businessman Murarilal Jalan for the revival of Jet Airways, which has remained grounded since April 2019.

With the bankruptcy court’s approval, the consortium was able to revalidate the airline’s Air Operator Certificate (AOC) on 20 May 2022, and so far, it has deposited 150 crore with Jet’s lenders. The consortium reiterated that it will invest further, “only after next steps of NCLT are fulfilled in terms of handover of the company.”

As per a recent order by appellate tribunal NCLAT, the consortium has also been asked to clear pending provident fund and gratuity dues of Jet’s staff. The calculation has been to done until the date of insolvency commencement i.e. 20 June, 2019, which is expected to be about 250 crore. The consortium has not confirmed so far whether it will make this payment while tensions between the lenders and consortium have risen, Mint reported earlier.

The scrutiny of the consortium by the lenders has further grown after investigations and raids against Kalrock Partners promoter Florian Fritsch in Liechtenstein, Switzerland and Austria. While charges are yet to be filed in the case, the probe was done on suspicion of aggravated fraud, breach of trust and money laundering.

Once India’s largest private airline, Jet Airways suspended operations on 17 April, 2019. As of January 2018, the airline had a domestic market share of 16.6%, second-largest after IndiGo. The new owners of Jet Airways reiterated that they are committed to the airline’s revival and have not breached any term of the resolution plan.

The consortium has planned a “modern full-service business model” for Jet Airways 2.0. The airline’s current staff strength comprises as much as 60% of employees from its previous workforce.

The Kalrock-Jalan consortium has also prepared letters of intent for aircraft, engines, IT systems, ground handling services, catering, call centre, and all of the other services required to run an airline, said Kapoor.

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