A gruelling seven-hour meeting between the Jet Airways [Get Quote] management and employees at the Ramada Hotel in Mumbai on November 23 ended in partial success with employees other than the airline's 750-odd Indian pilots agreeing to take graded salary cuts to help keep the troubled airline afloat.

The pilots asked the management to give them a firm commitment on laying off the airline's 240-odd expatriate pilots, most of whom are commanders and receive salaries 50 per cent higher than their Indian counterparts. The expatriate pilots are employed on contract.

The airline had, however, laid off about 27 expatriate pilots who flew the 737 fleet a few weeks ago. The Jet management said it is prepared to meet the pilots again in the next few days for an amicable settlement, but does not rule out strong action if there is no agreement.

The trouble for Jet Airways, the country's largest private carrier, in immediately laying off the expatriate pilots is that most of them are flying the wide-bodied aircraft for the airline. But the airline is yet to lease out at least six of the Boeing 777-300-ERs. In the recent past, it announced a deal with Turkish Airline but the final lease agreement is yet to be finalised. The airline also has to phase out certain aircraft as part of fleet rationalisation and this move will also take time. So, to deliver immediately on the Indian pilots' demand will be tough call for the airline.

"We are ready to take care of their concerns and talk to them again, but if the stalemate continues the airline is prepared to tell the pilots to either take the salary cut offer or go," said a senior executive.

Employees (including commercial, engineering, ground staff) earning less than Rs 75,000 a month, will be excluded from the cut. Thereafter, the percentage cut increases with the salary band. Jet's top management is also expected to take higher salary cuts voluntarily beyond the mandated amount.

Jet Airways has an annual salary bill of Rs 2,000 crore (Rs 20 billion) for over 15,000 employees. Wages have shot up to nearly a quarter of operating costs from the industry average of 14-15 per cent, making the cutbacks urgent. The airline made a loss of Rs 384 crore (Rs 3.84 billion) in second quarter of the current financial year, against a profit in the same period last year.

The management has also decided to set up a five-member task force to examine ways for the airline to save costs.

The problems with the pilots adds to Jet Airways' struggles to cut manpower costs. Last month, the airline had announced that it would lay off over 800 employees, only to take them back after strong opposition from political parties and intervention from Civil Aviation Minister Praful Patel.

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