Air India disinvestment: Will govt go the VRS way to tame uncooperative unions?

The Government of India (GoI) on January 27 said it will completely exit Air India, including in units Air India Express (AIXL) and Air India SATS (AISATS). However, the dozen odd employee unions of Air India, who do not seem pleased with this decision, may be forced to accept the deal.

Human resource experts said there is a possibility of offering a voluntary retirement scheme (VRS) to middle staff, followed by de-recognition of multiple unions.

In the past two years, multiple unions, including Air Corporation Employees Union, have protested the move to privatise Air India, stating that this would be ‘disastrous’. Even this time, the unions are expected to launch a strong agitation against the government decision.

Industrial relation experts stated that while it was well within the rights of these unions to launch their protests, this will not change the situation on ground.

"As per law, Air India is a government body. Employees are free to make unions and oppose certain decisions, but the decision of the central government is binding. It is likely that those coming in the way of privatisation could be given VRS," according to the head of industrial relations at a consulting firm.

Air India has more than 20,000 employees working across different functions in the country. An immediate concern of the unions is that there will be job losses as soon as a new buyer comes on board.

An HR expert, who has earlier worked with the government on a few privatisation projects, said that since the bid document talks about incentives like employee stock options (ESOP), not all employees will be discontent.

“Despite an ESOP announcement, if an employee group threatens protest or tries to derail the sales process, they will lose out on the incentives they would otherwise receive as permanent employees. Workers, especially those above 50 years, may find it lucrative to accept the offer,” he added.

The Air India sale announcement is being seen a step to ensure success in its second attempt at divesting the national carrier.

The government has appointed EY to advise and manage the proposed transaction. The last date to submit the EoI is March 17, and the government will intimate the qualified bidders by March 31.

Its earlier attempt in 2018, when the government had offered to sell 76 percent stake, had come a cropper. This was due to a lack of interest to bid. The government had stated in the past that they would be forced to shut the airline if there were no bidders.

Air India, whose net loss in FY19 had ballooned to Rs 8,556 crore from Rs 5,348 crore in the preceding year, has total liabilities of over Rs 52,000 crore. To attract additional suitors this time, the government has already parked nearly Rs 30,000 crore of debts and liabilities in a special purpose vehicle (SPV).