Air India's new owner might be able to lay off staff

Air India's new owner might be able to lay off staff, trim fleet size: Report

Under the current rules, the successful bidder will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports

With the Air India privatisation being pushed to the next fiscal year, the Centre would probably make it easier for the new owner of the airline to trim its fleet size by hiving off surplus aircraft lying grounded and lay off staff.

Considering the situation, the pandemic-hit aviation sector is still looking for ways to recover from the losses it incurred during the lockdown.

"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,” Business Standard quoted an official. 

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The preliminary information memorandum accessed by Business Standard states that AI has 133 employees per aircraft, while Air India Express (its subsidiary) has 55.

Sources told the news website that 25-plus narrow-body aircraft and 15 wide-body aircraft have been lying idle since the Covid-19 outbreak. AI is currently operating around 68 per cent of its pre-Covid capacity in the domestic sector.

The official further said that if demand does not improve, it will be unviable to operate those aircraft. Hence, such relaxation is likely to be given to the bidder.

Under the current rules, the successful bidder will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.

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Besides, the bidder would also get 100 per cent of the low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.

Salt-to-software conglomerate Tata Group and US-based fund Interups Inc were among "multiple" entities that put in preliminary bids last week for buying 100 per cent stake in the loss-making.

The Transaction Advisor will inform the qualified bidders by January 6 following which the bidder would be given access to virtual data room (VDR) of Air India.

The stake sale process got delayed due to the Covid-19 pandemic and the government has extended the deadline to submit preliminary bids for the national carrier five times.