India’s state-owned airline plans to shed flab before sale
Indian government plans to sell Air India in 2018 and prior to that it may offer voluntary buyouts to nearly 15,000 employees out of 40,000
Beleaguered state-owned airline Air India, which the Indian government wants to sell in 2018, is drawing up plans to shed staff and put all expansion plans on hold.
Air India may offer voluntary buyouts to close to 15,000 employees, out of 40,000, said Reuters quoting officials who wished to remain anonymous.
The government will have to convince seven trade unions to accept the plan to make the airline attractive to potential buyers. Their initial response was not positive.
J.B. Kadian, the leader of a union that represents 8,000 non-technical Air India staff, said a joint forum of unions representing Air India employees would launch an “agitation” in August if the government pursues its privatization plans, Reuters added.
Air India has US$ 8.5 billion in debt and since 2012, the Indian Government has injected US$ 3.6 billion to keep it afloat.
After Prime Minister Narendra Modi’s cabinet last month approved plans to privatize the loss-making airline, various players have expressed willingness to buy this legacy rich carrier.
One of them is Tata Group, the US$ 110 billion salt-to-software conglomerate. It had once owned the airline before it got nationalized.
The Tatas currently runs two joint venture airlines AirAsia India and Vistara, but both have low key presence in the Indian market. Being late entrants, both carriers face slot constraints and pilot shortage.
The other major front-runner is Indigo Airlines, a leading private carrier in India’s domestic circuit with a market share of nearly 40%.
It is, however, keen only to buy Air India’s overseas operations. Air India flies to 41 international destinations and has prime slots across major airports and Indigo hopes to tap that to increase its global footprint.