Centre says cost-cutting in Air India is 'necessary', yearly equity infusion of Rs 600 cr not sustainable

Air India said it has started the process of identifying employees who will be sent on compulsory leave without pay (LWP) for up to five years.

Press Trust of India July 16, 2020 23:11:31 IST
Centre says cost-cutting in Air India is 'necessary', yearly equity infusion of Rs 600 cr not sustainable

New Delhi: Equity infusion of Rs 500-600 crore every year is not sustainable and cost-cutting in Air India is necessary, Civil Aviation Minister Hardeep Singh Puri said on Thursday, justifying the national carrier's decision to send certain employees on leave without pay for up to five years.

The minister's remarks came after TMC MP Derek O'Brien slammed Air India, saying its leave-without-pay scheme violates labour laws and is an "obvious ploy" to protect the top management and sacrifice other workers.

Air India on Thursday said it has started the process of identifying employees, based on various factors like efficiency, health and redundancy, who will be sent on compulsory leave without pay (LWP) for up to five years.

Asked about the TMC MP's comments at a press conference, Puri said, "Equity infusion of the kind of Rs 500-600 crore every year is not a sustainable thing to run an airline now. Everybody has to cut costs. That is what is happening here."

"What are the options that we have got? If the options are if you don't cut costs severely, and the next time I go to the honourable Finance Minister, it is with some trepidation that I will enter her room," the minister noted.

He said that even if Air India wants financial assistance from the government now, it may not be possible for the government to help the carrier as it has to meet other demands such as providing relief to vulnerable sections of the society amid the coronavirus pandemic.

Air India has a debt of around Rs 70,000 crore and the government started the process to sell it to a private entity in January this year. The national carrier's net loss in 2018-19 was around Rs 8,500 crore.

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, LWP and firings of employees in order to conserve cash flow.

For example, GoAir has put most of its employees on compulsory LWP since April.

Puri said at the press conference that if Air India packs up today, none of the employees will get a job.

"Today, there is a surplus of aircraft, there is a surplus of trained people available and it is a strain all airlines are facing. All airlines are indulging in this thing. So, terms like match fixing and all are better left to games like cricket. Leave airline operations to those who know how to run an airline," Puri noted.

Earlier in the day, O'Brien said on Twitter, "Air India's compulsory leave without pay scheme is unprecedented in history of Public Sector Undertakings. Obvious ploy to protect top management and sacrifice employees. Move violates labour norms, is anti-worker and arbitrary. This is match-fixing for proposed AirIndia buyers. Retrenchment in a new name.

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