Tuesday, December 22, 2020

Govt may permit Air India's new owner to trim fleet, lay off employees: Report

New Delhi: The Air India privatisation deal is likely to spill over to the next fiscal as the divestment process is unlikely to conclude in the current financial year. Note that the government has received multiple bids for the disinvestment of its stake in the debt-ridden national carrier. Centre is likely to make it easier for the new owner of Air India (AI).

A Business Standard report cited officials familiar with the matter saying that the new owner of the carried may be to trim the national carrier’s fleet size by hiving off surplus aircraft lying grounded. Since air travel is still restricted due to the pandemic and the skies are far from clear, the new owner may also be allowed to lay off employees as their requirement will shrink with the reduction in the fleet size.

This might be the government's way of helping the new owner as current rules of the airline’s disinvestment mandate that the new owner will have to guarantee employment to all personnel up to one year. However, Air India's new owner may be allowed to trim fleet as well as lay off employees for better management. The Covid-19 pandemic has already forced airlines the world over to let go of some of their workforce as planes remained grounded amid lockdowns. 

The official was quoted in the business daily saying, “Looking at the prevailing conditions acting as an overhang on the aviation sector, the new entity acquiring AI will be allowed to sell a few aircraft or return them to the lessor. They are anyway grounded due to lack of demand. With some aircraft sold, the manpower requirement, too, will drop. Proportionately, there can be some layoffs/”.

The national carrier has 133 employees per aircraft. On the other hand, its subsidiary — Air India Express — has 55 employees per aircraft. In recent months, the ratio has improved as the carrier rolled out a leave without pay scheme, wherein employees will be sent on leave for up to five years, the report added.

While the new owner may be allower to trim fleet size and sell assets, the government is likely to fix an upper limit up to which assets can be sold out. The Department of Investment and Public Management, the agency undertaking the sale process, said in a note that the new owner may be allowed to dispose of assets accruing from the 10-26 per cent of the net assets of the company.

22/12/20 ETNowNews.com

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