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Air India to offer 15,000 of its employees voluntary retirement ahead of its privatisation

  • Air India is planning to offer voluntary buyouts to over 15,000 of its 40,000 employees
  • The centre approved plans to privatise the loss-making airline in June, selling part or all of the company
  • An official in Modi's cabinet said that Modi was looking to build better ports and roads and did not want to spend money on the doomed airline
Air India to offer 15000 of its employees voluntary retirement ahead of its privatisation

Troubled national airline Air India is on the verge of being privatised. As a result, Air India is planning to offer voluntary buyouts to just over a third of its 40,000 employees. 

Air India has slashed its costs ahead of a 2018 sale. The voluntary buyout offer will be one of the largest in India’s state sector and will affect close to 15,000 employees. 

An official was quoted by Reuters saying that 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 plan in April, but nothing further had been done so far. 

The centre approved plans to privatise the loss-making airline in June, selling part or all of the company. Air India has a complex fleet, too many staff relative to its peers and $8.5 billion in debt.

An official in Narendra Modi’s office 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. 

The official also said that Modi was looking to build better ports and roads and did not want to spend on the doomed airline. Since 2012, the centre has injected $3.6 billion to keep it afloat. 

The government will, however, need to convince seven trade unions to accept the plan to make the company attractive to potential buyers, including buyouts and other efforts to slash costs.

J.B. Kadian, leader of a union that represents 8,000 non-technical staff of Air India, said, “The government will propose a VRS scheme, and we will throw their proposal in the dustbin.”
The action provoked uproar on social media and was belittled by aviation experts, who argue Air India management needs a massive structural overhaul.

The airline is also trying to stay relevant by launching direct international flights. Air India started a direct flight to Washington in July. It will start flying to Stockholm, Copenhagen and Los Angeles later this year.
 

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