Air India sacks 43 employees, move to save R6 cr per annum

In its desperate attempts to cut costs, the government-owned Air India has begun the cleaning up exercise. It recently terminated services of 43 employees who were continuing on the payrolls even after retirement. The move will help the cash-strapped company save R6 crore annually.

The move comes at the advice of aviation ministry, which has also asked Airports Authority of India (AAI) and other departments to carry a similar exercise. According to a ministry official, even in AAI, a few people have been asked to leave.

?For AI, which is under debt restructuring process, it is necessary that the company takes every step to reduce its cost. These are many more people whose employment contracts are being extended even after retirement for various reasons other than merit,? the official said.

The carrier has identified 95 more such people who may face similar consequences. ?We are in the process of reviewing their performance and role in the company. Depending on that, we?ll take a call on whose services should continue,? an AI official said.

Though the number of such people are too small for a company with around 30,000 employees and an annual bill of over R3,000 crore, the cleaning up exercise is significant as lowering operational cost is one of the main criteria that the carrier needs to fulfill to avail financial support from the government.

The carrier is also going through a wage restructuring process, for which the government has appointed a committee.

In one of its recommendations to bring down the wage bill, the committee has suggested that the salaries of around 2,200 pilots in AI, should be brought down at par with their counterparts in the private airlines in the country. This, if implemented, would lead to a reduction of up to 30% savings from pilots? salaries.

?Bringing AI pilots? salaries at par with private carriers would not really help much in savings as the overall wage restructuring is going to be cost neutral. But, it would certainly make a difference in long run,? said the aviation ministry official.

The government recently approved the debt restructuring plan of the national carrier under which the airline would be allowed to raise R7,400 crore via bonds, backed by a sovereign guarantee. The carrier, at present, has a total debt of Parul R43,777 crore.