This COVID-19 pandemic has forced us to re-evaluate our best laid plans, IndiGo Airlines CEO Ronojoy Dutta said.
IndiGo, India's largest airline by market-share, will let go of 10 percent of its workforce to offset the decline in revenues post the COVID-19 pandemic, its top executive said on July 20.
"It is clear that we will need to bid a painful adieu to 10 per cent of our workforce. It is for the first time in the history of IndiGo that we have undertaken such a painful measure. This is indeed a very unfortunate turn of events from the optimistic growth trajectory we had carved out for ourselves just six months ago; but this pandemic has forced us to re-evaluate our best laid plans," CEO Ronojoy Dutta said in a statement.
The announcement confirms Moneycontrol's story, dated June 30, which had detailed that the airline had begun to lay off its employees, and also extended leave-without-pay for many.
Though the airline had also cut pays across its personnel, these steps were not enough to offset the decline in revenues.
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"And from where things stand currently, it is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations,"Dutta said.
As of March 2019, IndiGo had 23,531 employees.
Apart from IndiGo, all its peers, including Air India, Vistara, SpiceJet and GoAir have been forced to take similar steps to reduce costs. But this is the first formal announcement of a layoff by a domestic airline.
Domestic flights were suspended in March, coinciding with the national lockdown to limit the spread of coronavirus. The government later resumed domestic flights on May 25, asking carriers to limit their operations to one-third of this schedule. Though this limit was raised to 45 percent, airlines continue to operate at about 30 percent.
"IndiGo is flying only a small percentage of its full fleet of 250 airplanes," Dutta said. Earlier this month, the top executive had said that the airline is operating about 30 percent of its fleet.
He had pointed out that fixed costs are as high as 40 percent for airlines, and that IndiGo was spending Rs 40 crore a day during the lockdown. "That number has come down. We are trying to whittle that down further by flying more," he had said.
Data from industry regulator DGCA showed that traffic had plummeted by 83.5 percent in June, year-on-year.
While the latest statement from IndiGo didn't detail which of its employees will be impacted, Moneycontrol had earlier reported that some of the cabin crew members and ground staff had been laid off.
Advisory firm CAPA India had said that the COVID-19 disruption will eventually leave about 30 percent of the aviation industry's workforce, redundant.
Financial packageFor those impacted by the layoff, IndiGo has announced a financial package. These include:
- Notice pay in lieu: Impacted employees will be paid notice pay in lieu of serving notice applicable to them. This will be calculated on the gross salary, basis the employee’s notice period.
- Severance payment: In addition to notice pay, impacted employees will be paid a severance pay which will be calculated as one month of CTC for every completed year of service, subject to a maximum of 12 months. "At a minimum, an impacted employee will receive at least 3-months’ gross salary, including both the above payments," the airline said.
The impacted employees will also be paid bonus and the performance lined incentive, when the company decides to make this pay-out to the rest of the employees during the financial year.
While crew members will also get a longevity bonus, all the laid off staff will be able to encash their leave and will be given gratuity, the airline said.Apart from these measures, the airline said it will help the impacted employees through an 'outplacement allowance,' which will help them to pursue career options. These employees will also get a one-way ticket back home.