Jet Air dismisses 1000 staff, Kingfisher may follow suit

In one of the largest layoffs in Indian aviation sector, Jet Airways hands in the pink slip to more than 1000 cabin crew and customer care executives. Earlier CNBC-TV18 had reported that Jet Airways and Kingfisher Airlines had announced a cost-cutting collaboration on Monday October 13. Meanwhile, sources say that Kingfisher Airlines is also likely to lay off employees. Sources further reported that Jet and Kingfisher would meet to discuss route rationalization in the next two to three days.

As per the latest updates, Jet Airways has said that as the condition of the company improves, they will take the employees back. A total of approximately 1900 personnel will be laid off, it added. They clarified that lay-offs are not a part of an alliance with Kingfisher. "Lay-off decision is unfortunate and is an attempt to save the company. Personnel laid off were initially hired to implement expansion plan." Jet Airways said not to expect any political implication from the lay-off decision and the decision is prompted purely by economic situation. The company has to take such a decision for the first time in 15 years and it affects all the sections of the company. Apart from that, the expansion plans have also been cut down, withdrawing some international routes and implemented expansion plans are also being curtailed.

Here is a verbatim transcript of Karma Paljor’s comments on CNBC-TV18. Also watch the accompanying video.

Q: Explain the likely quantum of attrition from a Kingfisher perspective and how important is the alliance factor, considering small players are meeting to form an alliance, which is similar to the Jet Kingfisher pact?

A: Yes, this is in line with what the Chief Executive Officers (CEOs) have been talking about. Jet Airways said that they were would lay off some 1000 odd staff and this is not the confirmed staff, this is the staff which was on probation, which was taken for expansion plan.

Sources said that those on probation, those who are taken to fly the new routes that they are going to charter may be dismisses. The US operations has been suspended, due to which a sizeable chunk of around 1000 staff would be asked to go off, which means that they will not be confirmed. These staff were essential for expansion. All the experienced staff is going to move to international operations to fly to Europe now..

So as far as Kingfisher is concerned we are expecting the same.

The aviation industry is expected to incur a loss of over Rs 4,000 crore. It is a very difficult time for them right now. The CEOs are meeting to discuss this issue with the Aviation Minister in Hyderabad.

Q: There are also newspaper reports that Captain Gopinath may be actually vying a Deccan buyback with support from some PE players and that he is unhappy over the Jet alliance and he also looking at meeting Vijay_Mallya/404' class='bl-12-u' target='_blank'>Vijay Mallya today. Did you pick up anything from your sources?

A: Captain Gopinath said he was going to meet Vijay_Mallya/404' class='bl-12-u' target='_blank'>Vijay Mallya, where the Kingfisher Airlines chairman would try and explain the model that they working out with Jet Airways. But he may be very clear that should Vijay_Mallya/404' class='bl-12-u' target='_blank'>Vijay Mallya and Naresh Goyal plan to kill the low cost model of Air Deccan or Kingfisher Red which they call it now, then he would certainly try and combat and buy Kingfisher Red back from Vijay_Mallya/404' class='bl-12-u' target='_blank'>Vijay Mallya, so that would be a significant move. But the clause being that Captain Gopinath would need the funds to do that and since he has made this Air Deccan dream come true a lot of people would love to back him at this point.

Q: Getting back to the labour issue considering that assurances were given to employees post the pact. Do you see a lot of trouble brewing in right now that this news of lay off has come in?

A: I don’t think so. As far as the Jet Airways and Kingfisher are concerned, most of the employees that they are going to lay off were on probation and Jet Airways made this statement that they were laying off probationers. So I don’t think there will be any problems. They said that they would give them good compensations.

Q: Are you also picking up any news on the small players now forming an alliance of their own, which includes Indigo?

A: Possible at this point but we will really have to see how they can get together. The aircraft, fleet size and the make will have to match Boeing. If SpiceJet is flying all Boeing fleets then Indigo would be flying then all the Airbus fleets. So all these factors will have to be taken in to see how they can really come together.