Jet Airways suspended operations in 2019, following bankruptcy (Representative image/PTI)
Grounded air carrier Jet Airways has cut the salaries of and put on leave without pay a significant of employees, sources said on November 18, after the grounded airline’s revival plan hit another roadblock.
Roughly half the workforce is affected by this decision, according to people familiar with the matter.
Sources Moneycontrol spoke to said that Jet Airways has temporarily reduced salaries of some employees’ salaries by upto 50 percent and that some employees have been sent on without pay, effective December 1.
One individual aware of the on-going discussions told Moneycontrol that almost half the staff not impacted by either.
“Even Sanjiv Kapoor (Jet Airways’ chief executive officer) has agreed to take a substantial pay cut,” the individual said.
CNBCTV-18 had earlier on November 18 reported that Jet Airways has sent 60 percent of its employees, including senior managers, on leave without pay.
Jet Airways Sajiv Kapoor CEO took to twitter to say that the new of Jet Airways sending 60 percent of its employees, including senior managers, on leave without pay was “100% false information”.
Kapoor also took to Twitter to calm nerves and said, “No one is being fired.”
The news comes in the wake of the airline’s revival hitting yet another hurdle after the new owner, the Jalan-Kalrock consortium, told the National Company Law Appellate Tribunal (NCLAT) of its inability to pay additional monies to clear staff provident fund (PF) and gratuity dues of around Rs 250 crore.
On October 21, the NCLAT had directed the consortium to clear employees’ unpaid PF and gratuity dues until June 2019, when the insolvency process was initiated.
The Jalan-Kalrock consortium has said that while they await the handover of Jet Airways per the NCLT process, the longer-than-expected time taken for the same may result in some difficult decisions.
“While we await the handover of the airline per the NCLT process, the longer-than-expected time taken for the same may result in some difficult but necessary near-term decisions to manage our cash flows to secure the future,” a spokesperson of the consortium said.
Former Older staff (from before the airline shut shop) comprise more than 60 percent of the current workforce of Jet Airways, Ankit Jalan, Board Member, Jalan-Kalrock Consortium, said in a statement.
He added that there the brand enjoyed tremendous goodwill and there was public support for its revival.
“The revived Jet Airways will provide additional career opportunities, including to the airline’s former staff who currently make up more than 60 percent of the workforce, and for many more, as the revived airline grows. Jet Airways would be a shining example of the IBC (Insolvency & Bankruptcy Code) working as intended in India,” Jalan said.
“We reaffirm that there has been no delay from the JKC to implement the resolution plan, and we are in full compliance of the approved plan,” the consortium said in a statement.
The consortium said that it was not liable to pay anything beyond Rs 475 crore, and all claims had to be settled with that sum.
All additional claims not factored in the approved resolution plan should be settled from the cash balance of the airline, which was around Rs 50 crore, and the remaining from the share of banks, it said.
In May, the All-India Jet Airways’ Officers and Staff Association had challenged the consortium’s resolution plan for the airline at the NCLAT.
Jet Airways was grounded in April 2019, after which its lenders took it to the NCLT. Per the Jalan-Kalrock consortium’s resolution plan, the consortium proposed a total infusion of Rs 1,375 crore. This included Rs 900 crore towards capital expenditure and working capital, and Rs 475 crore to settle the claims of all creditors. The sum of Rs 475 crore includes Rs 380 crore to be paid to lenders, Rs 52 crore to employees and workmen, and the remaining towards other operational creditors.
But the lenders had raised concerns over the disbursement of these funds.
In response, a spokesperson of the consortium had said, “The lenders have been informed on multiple occasions that we are ready with the funds. The consortium has already deposited Rs 150 crore with the lenders.” Further, the spokesman said it was prepared to make payments of Rs 52 crore, per the plan.
After the NCLT’s approval, all conditions precedent outlined in the resolution plan were completed by May 20, 2022, and the necessary filings were made before the tribunal 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 the next steps of the NCLT are fulfilled in terms of hand over of the company to us. We have not breached any term of the resolution plan, and we remain committed to the revival of Jet Airways,” the consortium had said.
