IndiGo to lay off 10% of its staff2 min read . Updated: 20 Jul 2020, 09:47 PM IST
'It is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations,' says CEO Ronojoy Dutta
NEW DELHI : India's largest airline, InterGlobe Aviation Ltd-operated IndiGo, which flies one in every two domestic passengers, will lay off a tenth of its staff or about 2,700 people, to survive the disruptions caused by covid-19 pandemic, the chief executive of the airline Ronojoy Dutta said in a statement on Monday.
"And from where things stand currently, it is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations," Dutta said.
"Therefore, after carefully assessing and reviewing all possible scenarios, it is clear that we will need to bid a painful adieu to 10 percent of our workforce," he added.
IndiGo had about 27,000 staff, including contractual staff, in their work force as of 31 March, according to a company spokesperson.
Impacted employees will be paid 'notice pay in lieu of serving notice applicable to them', apart from a severance pay which will be calculated as one month of CTC (cost to company) for every completed year of service, subject to a maximum of 12 months, while their insurance coverage will be extended till December 2020, Dutta said.
"An impacted employee will receive at least three-months’ gross salary, including both the above payments (notice pay and severance pay)," he said adding that such employees will also be eligible to collect their annual bonuses and annual pay-linked incentives, when the company decides to make the payout to rest of staff.
During May, like most of its peers, IndiGo had initiated 20-25% pay cuts for senior staff, including pilots, in addition to a graded leave-without-pay programme for all its employees until July to save on costs following the outbreak of covid-19 pandemic.
The pandemic, which has claimed millions of lives across the world, has also hit the aviation sector hard as demand remains muted while the country inches towards normalcy after prolonged periods of lockdowns and travel restrictions.
"....we did have to undertake a number of measures such as Pay Cuts, Leave Without Pay and various other costs; but unfortunately, these cost savings are clearly not enough to offset the decline in revenues," Dutta said in the statement.
The domestic aviation industry is expected to incur losses of $3 billion to $3.6 billion in the June quarter, with airlines hit the hardest following a raft of restrictions and diminishing travel appetite because of the covid-19 pandemic, aviation consultancy Capa has said.
Apart from IndiGo, national carrier Air India Ltd's board of directors have recently approved a leave without pay (LWP) scheme for a section of its employees for a period of six months to two years, which is extendable to up to five years, in a bid to cut costs during the current pandemic.
Other airlines have also taken similar cost cutting measures which include salary-cuts, and layoffs. However, the number of people fired by IndiGo is one of the largest in Indian aviation, given its sheer size.