Air India May Shed 7,000 Jobs as Workers Retire, Union Says
Arvind Jadhav, Air India's managing director, pauses during a news conference. Photographer: Namas Bhojani/Bloomberg
National Aviation Co. of India Ltd., the state-owned parent of Air India, may shed as many as 7,000 jobs through retirements over the next three years as it seeks its first profit, according to the company’s biggest union.
About 9,000 workers will probably retire in the period of whom only 2,000 may be replaced, George Abraham, the Aviation Industry Employees’ Guild’s general secretary, said by phone yesterday from Mumbai. Some of the other retirees will likely be replaced by new hires at suppliers and ventures, he said.
National Aviation’s board is due to discuss a restructuring plan on July 25 and paring some of the more than 30,000 workers may help in meeting a government-set cost-cutting target. The company has been unprofitable every year since its formation in 2007 as it struggles to combine two carriers and loses customers to Jet Airways (India) Ltd. and Kingfisher Airlines Ltd.
“Losing people is a very good thing for Air India but they need to make sure that they retain the skills,” said Christopher Tarry, a London-based independent aviation analyst. For outsourcing to work there needs to be “a competitive environment otherwise they’ll be replacing an internal monopoly for an external one.”
About half of National Aviation’s workforce will reach the retirement age of 60 years old, over the next five years, said Abraham, who will address the July 25 board meeting. The union has a “progressive” attitude toward restructuring, he said.
The carrier expects “a lot” of retirements in the coming years as it had a surge in hiring in the 1970s, said airline spokesman K. Swaminathan. He didn’t give a more precise estimate.
National Aviation plans to cut losses by about 75 percent in the year ending March, Chairman and Managing Director Arvind Jadhav said last week. Internationally focused Air India was combined with domestic carrier Indian Airlines to form the company about three years ago.
Ground-handling Venture
National Aviation plans to transfer as many as 3,000 ground-handling staff to a newly formed venture with Singapore Airport Terminal Services Ltd. to pare costs, Abraham said. Other similar moves may follow, he said.
The company had total debts of 152 billion rupees ($3.2 billion) as of June last year, according to the government. On July 14, it extended the deadline for banks to bid on the refinancing of $1.15 billion of debt.
National Aviation has a 17 percent share of India’s domestic air-travel market, trailing Jet and Kingfisher, according to the aviation ministry.
The company received 8 billion rupees in the form of new equity from the government last fiscal year. A further 12 billion rupees was also set aside for the airline operator in the budget for the current year, according to the ministry of civil aviation.
The government has said that National Aviation must cut costs by 15 billion rupees and boost sales by 12 billion rupees before it will consider injecting more funds into the company.
To contact the reporter on this story: Siddharth Philip in Mumbai at Sphilip3@bloomberg.net
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