Travel and hotel booking firm Ixigo said its leadership team will take a 60% pay cut while other employees will suffer pay cuts in the range of 20-50%, according to a blog post by company CEO and founder Aloke Bajpai.
Bajpai and Rajnish Kumar, the co-founders of the firm, will take a 100% paycut, according to the blog. The company employs close to 150 employees in its headquarters in Gurugram, its only location in India.
“Over the last week, Rajnish and I spent countless sleepless nights, and in consultation with our leadership, came up with a Plan B that is painful, but necessary,” wrote Bajpai.
“To start with, the two of us took a decision to forego our entire salary immediately and for as long as required to get things back on track,” he added in the blog post dated March 30.
Ixigo had invested in intercity mobility startup gogoBus a few days before the lockdown.
The central government suspended all domestic flights on March 25 followed by a suspension of international flights a day after. Passenger trains and public transportation has also been shut in the country until April 14 due to the three week nationwide lockdown to contain the Covid-19 pandemic.
Bajpai, who termed the situation as “the darkest hour for travel” said that the leadership team anticipated a lockdown two weeks ago and has been working on a plan to potentially survive even with zero revenues for three to six months.
“We evaluated several options, including letting a significant number of ixigems go,” but decided against the idea as people would lose “morale and financial resources” required to fight the testing times.
The CEO assured that the salaries will be reinstated as soon as the situation improves. The accumulated salary deductions will be converted into an employee stock ownership plan to ensure employees benefit from future profits.
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According to Bajpai, the company gained 50% in revenue in 2019 and reduced gross burn rate (the total amount of cash spent each year) by 85%. Ixigo was on course to hit profitability in 2020. It had clocked 113.5 crore revenue in 2019.
A few days ago, another travel website MakeMytrip.com announced it would cut salaries of top and managerial level employees as its business has been taking a severe beating due to the Covid-19 outbreak.
The media report also said that the Gurugram company will lay off nearly 400 employees, about 60% of its backend and support services workforce, who were not part of the direct payroll.