Govt Will Allow Air India’s New Owner To Fire Upto 25% Employees To Save Money

The new owner of Air India will be given the authority to sell off unused aircrafts, which will result in employee layoffs.
The new owner of Air India will be given the authority to sell off unused aircrafts, which will result in employee layoffs.

The Indian loss making public airline Air India is under a lot of news, due to the airline’s disinvestment process.

Now, there have come forward some opportunities and steps which will be handed over to the new owner of Air India.

These allowances will give some power to the new owner of the public airline, including layoffs and selling off few AI aircrafts, shall the need arise.

Let’s learn in detail about this.

AI New Owner Can Sell Unused Aircrafts

As per a note from the agency undertaking the AI sale process, the Department of Investment and Public Management, the new owner of the airline will be given the authority to dispose of assets cumulating from 10-26% of the net assets of the company.

The new owner can reduce the national carrier’s fleet size by selling off unused aircrafts lying on ground.

“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”, says an official.

Furthermore, with 78 narrow-body Airbus A320s and 43 wide-body Boeing 777s and 787s, Air India holds a total of 121 aircrafts.

Sources have notified that over 25 narrow-body aircrafts and 15 wide-body ones have been lying idly on ground since the pandemic struk. This has killed the demand.

These conditions are going to be part of the share purchase agreement to be shared with bidders, following which financial bids will be invited. The legal firm Cyril Amarchand Mangaldas is drawing up the share purchase agreement.

Selling off Idly Lying Aircrafts Will Cut Jobs

Currently in the domestic sector, Air India is operating only at about 68% of  pre-Covid capacity.

Officials notify that if demand doesn’t improve, it will be unviable to operate those aircrafts.

Thus, if reduction in fleet size takes place, which means if the new owner decides to sell off some aircrafts or returns them to the lessor, there are going to be employee layoffs.

As per the current rules of the airline’s disinvestment, the new owner is mandated to guarantee employment to all personnel up to one year.

As per the preliminary information memorandum, Air India has 133 employees per aircraft, while its subsidiary Air India Express has 55 employees per aircraft.

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