Mumbai, Aug 20 - Cash-strapped national carrier Air India Thursday decided to cut performance-linked incentives of its employees by 30 to 50 percent.

The decision was taken at a meeting between the management and employees union leaders and the workers have accepted the cut, an airline official said.

The incentives, being given to employees in addition to the salary, contributes to Rs.130 crore of the airline's expenses.

The carrier had earlier come under severe criticism for offering huge incentives to its 31,000 employees, even while it was making losses.

Air India is also holding talks with various bankers to raise capital. The airline is now looking to convert its high cost debts to low-cost debts for which it needs the help of the government as a guarantor.