State-owned Air India?s plan to redeploy nearly 28,000 staff including contractual workers is expected to take off soon with the civil aviation ministry approaching the Cabinet for operationalising of two special business units (SBUs) of maintenance, repair and overhaul (MRO) and ground-handling. The move would help the ailing airline reduce its wage bill by making the salary structure comparable with the private sector.
The two SBUs of ground handling and MRO would be handled respectively by the airline?s subsidiaries ? Air India Air Transport and Air India Engineering respectively. Another SBU of cargo would, however, continue to function under the Air India management.
Air India has a total manpower strength of about 42,000 comprising 29,000 permanent and the remaining casual or contractual workers.
?The operationalisation of SBUs is part of the ministry?s note to the Cabinet for further fund infusion of Rs 1,200 crore into the airline,? a civil aviation ministry official said.
The second tranche of financial help to the national carrier by the government is linked with the airline?s ability to cut cost by steps such as returning leased aircraft, stopping excessive loss-making routes and rationalising wage bill of about Rs 3,200 crore annually.
While Air India has successfully met some of the cost-cutting targets set by a group of ministers (GoM) in February this year, it is yet to cut wage bill due to stiff resistance from employees.
?We would be able to cut wages only after the government approves the hiving off of SBUs and back us to negotiate with the unions,? an airline official said. ?We would seek the guidance of CCEA to negotiate wages as any move by the management to rationalise it could lead to industrial relations issues. Government support would be essential for that,? he added.
Air India is currently facing one of the worst financial crisis with the possibility and could fail to honour commitments to its lenders. Last week, oil companies had threatened to put the airline on cash and carry for not clearing the dues of aviation turbine fuel (ATF) on time. An airline official said that the carrier owes about Rs 1,800 crore to oil marketing companies out of which about Rs 1,070 crore is overdue. It has also accumulated dues of various vendors such as caterers to the tune of Rs 600 crore.
Air India has an accumulated operating loss of nearly over Rs 13,500 crore and carries a debt burden of about Rs 40,000 crore borrowed to meet working capital requirements and financing of aircraft purchase.
?In certain cases, the airline may face default and encashment of guarantee in the absence of government support,? a government official said. Air India has a total working capital loan of nearly Rs 19,500 crore.
