Jet Airways is promoted by Naresh Goyal.
Etihad holds 24 per cent stake yet it is facing acute cash crunch after posting two back-to back quarterly losses this year.
While its losses stood at Rs 1,036 crore in the March quarter, the losses jumped to Rs 1,300 crore in the subsequent June quarter of the current fiscal.
Withholding salaries, that too without prior notice, is a serious matter and the management will bear sole responsibility for any repercussions, Jet Airways' pilots said in a communication to the management earlier this week.
We would like to advice that failure to address the above points and not paying the salaries on time would lead to non-cooperation by pilots, they warned.
A Jet Airways' spokesperson said the management is in dialogue with the pilots and other members of its team to resolve some issues including disbursement of salaries.
Significantly, Jet Airways had delayed payment of July salaries to its staff earlier.
It had proposed an up to 25 per cent cut in salaries of its employees in late June but was forced to defer the plan following opposition from its pilots' union - National Aviator's Guild (NAG) - and engineers.
Earlier it was agreed that, henceforth, salaries would be paid on time and, if there were to be a delay, the same would be communicated to the pilots well in time, the pilots said.
We are deeply disappointed over both these conditions being violated by the management and the pilot body would be sure to share our disappointment, they said.
The pilots had written to airline chief executive Vinay Dube late last month expressing their displeasure over the unnecessary increase in expenditure in the recent times.
In the fresh letter, they have also demanded that all unnecessary positions and committees/ groups created in the last three months be dissolved with immediate effect and the hiring of the expensive expats vis-a-vis domestic pilots be stopped forthwith.
We trust you will treat the above with the urgency it deserves and take immediate steps to resolve the situation, they said in the communication.
A spokesman for the Jet, India’s oldest privately owned airline, said on Wednesday that 15 per cent of the company’s employees had not yet been paid for August, though he insisted they would be eventually.
The company said it was evaluating various funding options to address its acute financial problems a day after it made a push for extra cash flow by announcing its largest ever sale, with price cuts of up to a third on 2.5m seats.
Jet and its Indian rivals are suffering the effects of much higher fuel costs, which have been driven up by a rise in global crude oil prices and the weakening of the rupee.
In India’s fast-growing but still low-income economy, the number of airline customers is rising quickly but they remain highly sensitive to pricing. This has held back companies from raising ticket prices to reflect rising costs.
In results issued after a delay last week, Jet said net losses had grown to $189m in the second quarter and promised cost cuts of $285m over the next two years.
Jet Airways has reported a loss in seven of the past 10 years.
I’m unable to understand the viability of the current state of affairs for them, said Madhukar Ladha, an analyst at HDFC Securities, adding that the company would need a major capital infusion if it did not benefit soon from a fall in fuel prices or a rise in the rupee.
As of the end of March, Jet’s liabilities stood at Rs200.9bn, against assets of Rs129.6bn. The company is 24 per cent owned by Gulf airline Etihad, which has said it remains committed to the investment but has not given any sign that it plans to inject more capital.
Other Indian airlines have also suffered a financial downturn in recent months: in its latest set of results Indigo, the country’s most valuable private airline, reported a 97 per cent fall in pre-tax profit.
The yields of the leading airline companies have not even kept pace with inflation over the past two years, let alone the sharp increase in input costs, analysts at Kotak Institutional Equities wrote in a recent report.
The financials of the leading aviation companies have deteriorated to worrisome levels while the industry grapples with irrational pricing.
In a report published on Monday, the Centre for Asia Pacific Aviation estimated that Indian airlines would post an aggregate loss of up to $1.9bn in the current financial year.
Jet has been hit particularly hard because its fleet is older and less fuel efficient than those of rivals.
Jet is reportedly seeking a sale of its 8.5m-member loyalty scheme business, with private equity firms TPG and Blackstone showing interest.
Mr Ladha added that Jet itself might start to look like an appealing buyout target to rivals at a knockdown price reflecting its negative margins and heavy debt but that such a deal was unlikely to appeal to Naresh Goyal, the company chairman who founded it in 1992.
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