A year and a huge sum of money down the drain, the government?s plan to put state carriers back on track remains grounded. More than a year after the erstwhile Air India and Indian merged under the National Aviation Company of India Ltd (Nacil), the carriers are still bogged down due to employees-related issues.

Sample this: The carrier lost 11,521 man-hours due to staffers of various departments going on strike in 2007-08. Key departments such as engineering, commercial and operations are yet to begin operations. A few directors and senior employees have not yet shifted base and keep shuttling between their present station and area of new posting at the company’s expense. The plan to surrender office space at various locations, domestic and international, to save on rentals has also failed with many unwilling to move.

At the time of merger in August 2007, the then chairman and managing director V Thulasidas admitted that the biggest challenge that the two public-owned carriers will face is the integration of the huge employee base. The carrier, after merger, had an employee base of more than 34,000 making it one of the largest employers in the country and the airline with highest number of employees per aircraft in the world.

The airline seems to be still struggling to headway common use of offices, manpower and other infrastructure According to an Air India official, there are several key departments, such as engineering, commercial and operations, which are yet to begin operations. There is no cohesion in the functioning of the company with personnel still working as employees of two separate airlines as is with key areas. For instance, Indian operated aircraft go for maintenance at the Indian Airlines MRO at the Delhi airport while Air India aircraft go for their maintenance checks to Air India?s Mumbai MRO facility.

This is because while Nacil has a maintenance, repair and overhaul (MRO) SBU, it is yet to be start operations as a partially separate entity as earlier planned. The structure of the merged entity was finalised at the time of merger and so were the six strategic business units.?Apart from directors appointed to mentor common functions, the SBUs had executive directors appointed almost immediately. However, lack of a line of command has led to some still remaining non-operational,? the official said.

In the process the carrier?s losses are mounting up due to redundant manpower resources. The national carrier is expected to post losses of around $1 billion in the current fiscal and has sought $458 million as fresh equity and soft loans from the government. Nacil targeted savings of approximately Rs 600 crore post-merger by synergising the various functions within the first three years of the merger.

The public carrier recently announced a slew of cost-control measures, including massive cuts in perks for executives and rationalising both its domestic and international flight operations apart from operational cost cutting. The measures include lesser water in the aircraft tanks to bring down the weight of the aircraft to have lesser fuel burn. However, an analyst, on the condition of anonymity, said this would bring down the service quality of the carrier ? something that it is already infamous for. These are not the only problems faced by the carrier due to non-cooperative employees.

The carrier saw seven strikes within the first six months of the merger being approved by the Cabinet in February 2007. All this despite of civil aviation minister Praful Patel and Thulasidas assuring none of the employees, including the unions, would lose their jobs.

To put this in perspective, India lost 13.75 million man-days and incurred production-related losses worth Rs 181.82 crore due to strikes and lockouts in the first nine months of 2006, ministry of labour and employment data revealed.

?One hour?s delay costs an airline like Air India a huge sum of money and with margins getting tighter and tighter due to rising operating costs and undercutting by rivals, the carriers? survival is at risk,? the official said. The non-cooperation may force the management to implement some extreme measures. The carrier is already reassessing its employee base and cost cutting measures to increase productivity and efficiency. The reassessment includes outsourced manpower across all the firm’s operational areas.

A solution that the company is looking at involves shifting superfluous employees from certain departments of the carrier to the same or similar departments in other PSUs. Another solutions talk of greater outsourcing wherever viable. The airline has also decided to review its contractual employment system after superannuation. The carrier’s CMD Raghu Menon has asked all department heads to review their contractual employment position in their respective departments and submit a report as soon as possible. Some of these reports have already been submitted. However, the time of action is yet to be decided. Other cost-cutting steps include doing away immediately with festival advances, subsidised loans, advances, reimbursements, educational scholarships and merit awards.

A justification detailing particulars related to the remuneration for a person being taken on contract post-retirement, listing out a consolidated sum to be paid, needs to be drawn up before making a case for employing the person. Also, encashment of leave for all categories of employees will be stopped with immediate effect. This order will, however, not apply to people who are due for retirement, sources said. Airline crew on flying duty will be allowed to encash leave that will lapse.

?We cannot retrench staff due to various reasons. That is not an option despite the surplus manpower we have in the various departments after the merger,? another official said.

There has been no lack of incentives offered by the management. In a bid to get employees to work in the absence of incentives in a government-run organisation, the carrier has already taken the government?s permission to issue 5% of its shares under a so-called Employee Stock Option Plan (Esops) earlier this year.

Though this is seen as a first step towards an IPO by Nacil, the government-run carrier is not expected to list on the bourses soon.