Air India to offer VRS, to reduce employee cost and debt for new buyer

The new owner will now have to handle debt of only Rs 23,286 crore out of the total debt of Rs 60,000 crore.

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Air India employees who have been quite uncertain about their future for some time, may now seek voluntary retirement. This will allow the Government to bring down the number of employees that the bidder /new owner of Air India will have to deal with along with reduced debt.

Presently, the airline has about 17,894 employees, of which 9,617 are permanent. Almost 3000, that is, more than 36 per cent, will be retiring in the next five years.

With the deadline for bidding being 17 March, 2020, discussions have been on with representatives of the trade union and the management about various elements post privatisation, including job security, service-contracts, gratuity, pension and voluntary retirement scheme (VRS).

The option of VRS may not be as easy to implement at Air India, as it was at BSNL and MTNL, the two telecom entities that the Government is planning to merge into one. With Air India to be sold to private parties, VRS will entail some risks since the liability of the settlements is not quite clear. By selling 100 per cent stake in the national carrier, the Government has already taken a significant burden on its own shoulders. The bidder will now have to handle debt of only Rs 23,286 crore out of the total debt of Rs 60,000 crore. Even the net worth for eligible bidders has been brought down from Rs 5,000 crore to Rs 3,500 crore.

It has reported that the Tata Group may bid for Air India, and the Hinduja Group has also been keen to do so.

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