Air India may cut 15,000 jobs ahead of sale

Air India may divest 15,000 of its 40,000 employees, as the top-heavy airline shapes up to woo a suitor, reports quoting official sources at the national carrier said.

The state-run airline is reported to be in the process of drawing up a proposal to offer voluntary retirements to just over a third of its 40,000 employees - one of the largest lay-offs among state enterprises.

The airline has also put fleet expansion on hold, scrapping a proposal to lease eight Boeing 787 wide-body aircraft approved in April.

The Narendra Modi government last month proposed the sale of loss-making Air India, in whole or in parts, after its mounting debt pile became unmanageable. But the airline that lived on state support for decades is finding no suitors with its over 50,000-crore debt pile.

Once the proud symbol of Indian hospitality with its Maharaja mascot, and ranking among some of the best airlines in the world, Air India failed to manage its expenses. With too many free flights, too many employees and a complex fleet acquisition process, the airline amassed a debt of Rs5,46,000 crore.

The government invested over Rs2,31,000 crore into the sinking airline since 2012, just to keep it afloat.

A sale would not be easy for the government as it needs to convince seven trade unions to accept the plan, which includes VRS and other measures to cut costs, so as to make the airline attractive to potential buyers.

Employees, however, are not convinced and their initial response was not positive.

"The government will propose a VRS scheme and we will throw their proposal in the dustbin," said JB Kadian, leader of a union that represents 8,000 non-technical Air India staff.

Kadian said a joint forum of unions representing Air India employees will launch an "agitation" in August if the government pursues its privatisation plans.

On Tuesday, members of the Air Corporations Employees' Union gathered near Delhi airport holding placards and shouting slogans opposing the privatisation and demanding the airline's debt be written off.

While previous attempts to privatise the airline have failed mainly because of the scale and complexity of Air India's problems, as well as resistance from employee unions, the Modi government seems determined to find a permanent solution to Air India's problems.

A committee of five cabinet ministers led by finance minister Arun Jaitley is expected to meet this month to sort out the finer details of the privatisation plan.

Air India, which began cutting costs at all levels, last month also decided to stop serving non-vegetarian meals in economy class on domestic flights in a bid to save up to Rs10 crore ($1.6 million) over 10 months.