Air India 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, a Reuters report said on Tuesday.
The official, who could not be named as the plans are not public, told Reuters 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 proposal in April but nothing further had been done.
India's flag carrier has been put up for sale after Prime Minister Narendra Modi's 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 told Business Standard that the Prime Minister, 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 as simple as we can," 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.
Previous attempts to offload the airline have failed mainly because of the scale and complexity of problems at Air India, as well as its influential unions, the Reuters report said.
If Modi can pull the privatisation off, it will buttress his credentials as a reformer brave enough to wade into some of the country's most intractable problems.
Air India net loss reduces to Rs 3,643 crore
Air India's net loss after tax narrowed to Rs 3,643 crore and operating profit rose to Rs 300 crore in the last financial year, the government said on Tuesday.
The airline saw total revenues, including exceptional and extraordinary items, increase to Rs 22,146 crore in 2016 -17 period, as per provisional numbers provided by Minister of State for Civil Aviation Jayant Sinha to the Rajya Sabha.
Total revenues of Rs 20,524.56 crore were posted in the year-ago period.
