Home / Companies / News /  Air India puts employee contract renewals on hold amid privatisation plans

New Delhi: Air India Ltd has put on hold employee contracts that were coming up for renewal as the government prepares for the airline’s privatisation.

“All proposals received for the post-retirement engagement of employees and renewals may be kept in abeyance till further orders except for operational/licensed category which has to be put up through personnel department," V. Hejmadi, director, personnel and finance of Air India said in a letter to the airline’s top management on 30 August. 

Mint has reviewed a copy of the letter which was also marked to Air India chairman Rajiv Bansal, who took charge of the airline late last month after former chairman Ashwani Lohani moved on to a new role at Indian Railways. 

Air India has not been able to recruit management staff for a long time; to keep things moving, it usually engaged people who were retiring from the same departments as consultants. That can’t happen now, although this will not apply for staff required for flight operations.

The Cabinet Committee on Economic Affairs (CCEA), in a meeting on 28 June, gave an in-principle approval for the strategic disinvestment of Air India and its five subsidiaries. 

On Wednesday, a group of ministers headed by finance minister Arun Jaitley held its second round of discussions on the privatization of Air India.

“We have decided to appoint transaction advisers," Jaitley said on Wednesday night after hour-long discussions.

Apart from Jaitley, civil aviation minister Ashok Gajapathi Raju, railway minister Suresh Prabhu and power minister Piyush Goyal as well as senior officials from the airline as well as the civil aviation ministry were present at the meeting.

The ministerial group is looking into treatment of Air India’s unsustainable debt, hiving off certain assets to a shell company, and strategic disinvestment of three profit-making subsidiaries, among other aspects. 

At least two firms—InterGlobe Aviation and the Bird Group—have formally evinced interest in Air India privatisation and have written to the civil aviation ministry in this regard.

A person familiar with the matter said that Bansal, who has been given an initial three-month tenure at the airline, could take tough measures that could help the carrier.

“I understand that there could be a longer tenure depending on these three months," this person added, asking not to be identified.

Bansal, additional secretary and financial advisor in the petroleum ministry, holds additional charge of Air India for now. 

“He will be holding additional charge for three months and the government will then take a call on who the regular person should be, whether it should be Rajiv Bansal or someone else," civil aviation secretary Rajiv Nayan Choubey said on 23 August.

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