IndiGo to lay off 10% of workforce as COVID-19 hits business; affected employees to get notice, severance pay
Over 2,300 employees will lose their jobs even as IndiGo continues to fly a small percentage of its full fleet of 250 airplanes in view of the coronavirus pandemic
New Delhi: IndiGo has decided to lay off 10 percent of its workforce due to the economic crisis caused by the coronavirus pandemic, its CEO Ronojoy Dutta said on Monday.
"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 in a statement.
"Therefore, after carefully assessing and reviewing all possible scenarios, it is clear that we will need to bid a painful adieu to 10 percent of our workforce. It is for the first time in the history of IndiGo that we have undertaken such a painful measure," he added.
As on 31 March, 2019, the airline had 23,531 employees on its payroll. Dutta said on Monday the "impacted employees" will be given "notice pay", calculated on the basis of gross salary, in lieu of serving notice applicable to them.
In addition to the notice pay, they will be paid a severance pay which will be calculated as one month of CTC (cost to company) for every completed year of service, subject to a maximum of 12 months, he said in the statement.
This means that if an employee has been working with IndiGo for six years, he or she will be getting an amount equivalent to six months'' gross salary (CTC) as a severance payment. However, those who have worked for 12 years or more with the company will get a fixed amount equivalent to one year's gross salary (CTC) as severance payment.
"At a minimum, an impacted employee will receive at least 3 months' gross salary, including both the above payments. Those with higher tenure with the company will receive more as per the above calculation method," he explained.
The aviation sector has been significantly impacted due to the travel restrictions imposed in India and other countries in view of the coronavirus pandemic. All airlines in India have taken cost-cutting measures such as pay cuts, leave-without-pay and lay-offs in order to conserve cash.
Dutta said annual bonus and performance-linked incentive will be paid to the impacted employees whenever the airline decides to make this payment to the rest of the employees during this financial year.
"Medical insurance coverage for impacted employees will be extended until December 2020. There shall also be a provision to continue with the policy post December 2020 as per applicable market rates," he added.
Moreover, if the impacted employees need to travel back to their hometown, IndiGo will assist them with a one-way confirmed air ticket, he said.
India resumed domestic passenger flights from 25 May after a gap of two months due to the coronavirus pandemic. However, the airlines have been allowed to operate only a maximum of 45 percent of their pre-COVID domestic flights.
Occupancy rate in Indian domestic flights has been around just 50-60 percent since 25 May. Scheduled international passenger flights continue to remain suspended in India since 23 March.
IndiGo is flying only a small percentage of its full fleet of 250 airplanes, Dutta said in the Monday statement.
"Right at the start of this crisis, IndiGo understood the gravity of the situation. For us, it was critical to minimise the impact of the pandemic on our employees and in fact IndiGo was one of the few airlines globally which paid full salaries for the month of March and April 2020, despite the disruption in business," he said.
Subsequently, IndiGo did undertake a number of measures such as pay cuts, leave-without-pay and various other costs but these cost savings are clearly not enough to offset the decline in revenues, he said.
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The experts stressed on the need to strike a balance between bio-security bubbles and the avoidance of "excessive" mental health costs to the players.
With lockdowns being eased and people getting back to normal life, there is a lot to worry about the potential third wave that could start soon.