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Last Updated : Jan 19, 2018 07:56 AM IST | Source: Moneycontrol.com

Air India’s bloated workforce could be a sticky point for bidders

The government-owned airline has about 29,000 employees, including those on contract. It will also matter that the company’s trade unions are opposed to the divestment

Prince Mathews Thomas @newlekhakh
 
 
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Even as the government has given the push for Air India’s divestment, the airline’s huge workforce may prove to be a sticking point for potential suitors.

The government-owned airline has about 29,000 employees, including those on contract. It will also matter that the company’s trade unions are opposed to the divestment, and any attempt to rationalise the workforce will face vociferous protests.

“Compared to its private peers, Air India surely has a huge people problem,” said an executive from the industry. “Any prospective bidder would want to get a clarification on this from the government,” he added.

Reports emerged earlier this week that the government might ask some of its other public sector units to ‘absorb’ some of Air India’s employees. But with most of these companies themselves suffering from bloated workforce, it remains to be seen how this move will take off.

While the company’s website says that it has a fleet of 119 aircraft, reports have indicated that it could be closer to 140. This fleet would be the second largest after IndiGo’s in the domestic market. Air India’s network though is the biggest. It flies to 44 overseas, and 75 domestic destinations.

On the other hand, IndiGo has a fleet of 153 aircraft and recently added its 50th destination. India’s only other full service airline, Jet Airways, has a fleet of 117 planes and flies to 66 destinations.

But Air India’s bigger operations don’t justify its workforce. While the company has nearly 210 employees per plane, Jet Airways has 119 and IndiGo needs just 80 per aircraft.

“Air India is overstaffed. There are many in the company who were appointed because of recommendations from politicians. Many positions were created to accommodate people,” says aviation expert Mohan Ranganathan. “Any airline that wants to buy Air India, wouldn’t want to be stuck with this stock,” he added.

A company spokesperson declined to comment.

"Frankly, there is nothing much Air India can do,"  said a source close to the company. "It is up to the ministry, and the government," the source said.

It’s not that the company hasn’t tried to prune its staff size. But its voluntary retirement schemes, implemented in 2003, 2008, didn’t really result in any significant reduction in the workforce. Last year, government officials had talked about launching a VRS for 15,000 of the airline’s employees. But nothing has been put on the table yet.

The government needs to sweeten the deal, says Rituparna Chakraborty, co-founder and executive vice president of staffing company TeamLease. “Otherwise, there is no way a new owner can sustain the operations,” says Chakraborty.

“This year, up to 4,000 employees are set to retire. There has been a gradual phase out and recruitment has also slowed down,” said a source close to the company. But that would still leave behind a long payroll.

Even the government’s attempt to get other public sector companies to absorb Air India employees would be a non-starter, says Ranganathan, also a former pilot. He adds: “It is difficult to understand how other public sector companies will absorb employees of Air India. Will those in Air India have the expertise to do something else? And how about the disparity in pay structures?”

Chakraborty adds that it’s inevitable that the Government has to find a way. “It has to do, what it has to do. No longer can it kick the can down the road.”
First Published on Jan 18, 2018 05:37 pm
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