New Delhi: Air India Ltd plans to start the process of reducing its workforce by launching a voluntary retirement scheme (VRS), moving some employees to subsidiaries, and terminating the services of some so-called contract employees.
Resurrection exercise: Air India hopes the VRS will prune 2,000-3,000 employees from its 28,000-strong workforce. By Vijayanand Gupta/Hindustan Times
It plans to do these as soon as its turnaround plan is cleared by a group of ministers (GoM) in February.
If approved, the plan will mean potential equity infusion of around Rs 30,000 crore over 10 years by the government. It will also require Air India to meet milestones, including a significant reduction of its 28,000-strong workforce.
That number means Air India incurs a salary bill of Rs 3,000 crore every year, the highest among Indian airlines, although it carries engineering and ground-handling personnel on its rolls, unlike most private carriers that outsource these services.
“Employee strength will come down to half after the formation of subsidiaries,” said a senior Air India official who asked not to be identified, referring to two new subsidiaries that will be created after the revival plan is approved.
The engineering and ground-handling subsidiaries will account for around 14,000 employees.
The airline then plans to launch VRS which, it hopes, will prune a further 2,000-3,000 employees from the rolls.
Around 7,500 employees are also set to retire over the next three years, apart from which the airline has decided that those who have retired and been signed on as contract workers will have to go.
Some 300 officers who retired have been retained by the firm.
Of these, 150 have been released in the past four months. Of the remaining 150, the airline plans to retain only pilots and engineers.
VRS could cost between Rs 5 lakh and Rs 10 lakh for each employee, said a second official who also declined to be named.
The airline is prepared to offer a good deal to encourage more people to retire, he said. Air India launched a VRS five years ago that had only 500 takers.
Air India is the only airline in India with a unionized workforce. It has around a dozen pilots and engineering unions.
A spokesperson for the All-India Aircraft Engineers Association said it will oppose the formation of any subsidiary, while adding that no progress was likely on the initiative until 2014.
“We will not support it because it is in the line of privatization. We want to be part of Air India, we don’t want to be a part of a separate entity. Any plan they make is hopeless...there is no professionalism,” the spokesperson said. “They are talking about it but nothing has come up. No approval has been given by the government. Till 2014 elections nothing will happen. This government is not bothered about Air India.”
Employees would welcome a retirement plan, he said.
“They are saying that there will be a golden handshake. Normally, a VRS is not open to licensed employees, but this VRS, it seems, would be open to all, which is unusual. We don’t know what they have in mind.”
A former Air India executive said the exit of people who have been working at the airline for a long time could help it introduce new work practices. “It’s a good step,” said Jitender Bhargava, retired executive director of the airline. “Unless the employee culture can be changed, there cannot be a resurrection.” If the airline was rigorous about the exercise, it could reduce its workforce by one-third, he said.
The first Air India official said that getting more people to leave may require a lucrative exit scheme that, in turn, increases the airline’s spending on VRS.
The group of ministers led by finance minister Pranab Mukherjee is to meet on 9 February to review the turnaround plan of the airline.
tarun.s@livemint.com