Home Business Jet Airways sends 10% staff on LWP, cuts salaries of another 23%

Jet Airways sends 10% staff on LWP, cuts salaries of another 23%


Jalan Kalrock Consortium (JKC) has sent 10 per cent of employees of on leave without pay (LWP) and reduced salaries of another 23 per cent of staff to cut costs as it is still waiting for the airline’s handover under the ongoing process in the National Company Law Tribunal (NCLT).

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The airline, which wanted to resume flight operations by October, currently has about 250 employees on its rolls. It went bankrupt in April 2019 under the old ownership. A resolution plan put forward by JKC was approved by the Committee of Creditors and the in October 2020 and June 2021, respectively.

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However, the ownership has not been transferred to JKC till date as a case regarding who will clear previous employees’ provident fund and gratuity dues is currently under litigation. JKC wants State Bank of India-led consortium of lenders to pay these dues and has moved to National Company Law Appellate Tribunal (NCLAT) on this matter.

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CEO said on Twitter on Friday that “two-thirds of staff are not impacted at all” by the cost-cutting measures.

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“Of the remaining one-third, most will be on temporary pay reduction. Only a small portion of the total (10 per cent) will be on temporary LWP. No staff has been let go,” he added.

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Kapoor said these are all good people who have been working hard to try to do what has never been done before: revive an airline that has gone bankrupt.

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“However with the ownership transfer timeline slipping due to factors outside our control, some temporary hard decisions had to be taken,” he added.

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The team working to revive was not responsible for the airline running out of cash and suspending operations in 2019, he noted.

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“They are trying to revive the airline using fresh capital, to give consumers more choices, to create more jobs, and bring back old jobs. They deserve our full appreciation,” he mentioned.

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It is not clear by what month will JKC be able to get ownership of the airline and restart flight operations.

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In a statement on Friday, JKC said: “While we await the handover of the company as per the process, the longer-than-expected time being taken 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.”

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Sources said that JKC has sent a significant chunk of mid- and- senior-level employees on LWP for two months. Another section of mid and senior-level employees have been asked to work for a “reduced number of hours” at salaries cut by up to 50 per cent, they added. Overall, 33 per cent of employees have been impacted by the cost-cutting measures.

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Employees in lower grades, cabin crew members, and pilots have not been impacted by the cost-cutting measures, they mentioned.

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In its statement, JKC said that it has not breached any terms of the approved resolution plan and it remains committed to restart Jet Airways.

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After the NCLT’s approval in June 2021, all conditions outlined in the resolution plan were satisfied by May 20 this year and the necessary filings in this regard were made before the on May 21, it mentioned.

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“JKC has deposited Rs 150 crores as required under the court-approved resolution plan with the lenders, with the remaining amounts to be invested only after the next steps of NCLT are fulfilled in terms of handover of the company to us,” it noted.

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“We have not breached any term of the resolution plan, and we remain committed to the revival of Jet Airways,” it said.

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According to the resolution plan, the consortium has to infuse a total of Rs 1,375 crore. This includes Rs 900 crore towards capital expenditure and working capital as well as Rs 475 crore to settle claims of creditors.

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The approved plan has a clause that states that the amount infused by the consortium for the settlement of claims of all stakeholders would be limited to Rs 475 crore. JKC wants the aforementioned employees’ provident fund and gratuity dues to be adjusted within this amount of Rs 475 crore and the lenders are opposed to it as they would have to take a further haircut.



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