Air India may offer VRS to some staff before privatisation

NEW DELHI: Air India Ltd is drawing up a proposal to offer voluntary buyouts to just over a third of its 40,000 employees, a senior company official said, one of the largest such offers in India’s state sector, as the carrier slashes costs ahead of a 2018 sale.

The official, who could not be named as the plans are not public, said the state-owned airline had also put fleet expansion on hold, scrapping a proposal to lease eight Boeing 787 wide-body aircraft. Air India’s board approved the proposal in April but nothing further had been done.

The Cabinet last month approved plans to privatise the loss-making airline—selling part or all of the company and ending decades of state support.

Founded in the 1930s and known to generations of Indians for its Maharajah mascot, Air India has a complex fleet, too many staff relative to its peers and $8.5 billion in debt. Since 2012, New Delhi has injected $3.6 billion to keep it afloat.

An official in Modi’s office said the leader, under pressure to cut spending and boost basic infrastructure like ports and roads, is in “no mood” to provide fresh monetary assistance to any lossmaking public sector company.

The official said that top bureaucrats in the civil aviation ministry and at Air India had been asked to present a report on how a voluntary retirement scheme (VRS) could be offered to about 15,000 of Air India’s 40,000 staffers, including contractors. “Nothing has been finalised but our aim is to make the strategic sale simple,” said a second top official in New Delhi, involved in the airline’s daily operations, adding that any fresh investments would be put on hold.

The government will, however, need to convince seven trade unions to accept the plan to make the company attractive to potential buyers, including buyouts. Their initial response was not positive.

“The government will propose a VRS scheme and we will throw their proposal in the dustbin,” said JB Kadian, leader of a union that represents 8,000 non-technical staff of Air India. Kadian said a joint forum of unions representing Air India employees will launch “an agitation” in August if the government pursues its plans to privatise the national carrier.

A committee of five senior federal ministers, led by finance minister Arun Jaitley, is expected to meet this month and begin ironing out the finer details of the privatisation plan.

In the meantime, civil aviation minister Ashok Gajapathi Raju said he wants Air India to begin cutting at all levels.

Earlier this month, the airline decided to stop serving non-vegetarian meals in the economy class on domestic flights, to save up to $1.6 million over 10 months.

Keeping planes in the hangar makes no sense when Air India is trying to find new sources of income. We should optimise the use of all possible resources. The idea is to present a robust firm to potential buyers ASHOK GAJAPATHI RAJU, aviation minister, in an earlier statement