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Merger of Indian, Air India to be bloodless

Govt is clear that there will be no 'rationalisation of employees', report Arun Kumar and Gaurav Choudhury.

india Updated: Oct 25, 2006 16:56 IST

Employees of Air-India and Indian -- formerly Indian Airlines -- have nothing to fear from the proposed merger of the two. The government is clear that there will be no 'rationalisation of employees', either through a voluntary retirement scheme or any other means.

Details of the proposed mega merger, announced eight months ago, have finally been worked out and presented to the civil aviation ministry. A group of ministers (GoM) will soon be formed to examine it, after which it goes before the cabinet.

The merger is likely to be in two phases. In the first, to be completed before the end of the financial year, the boards of the two companies will merge to form a single entity. Senior executives of both, designated Deputy General Manager (DGM) or above, will also be integrated to form a common management team.

In the second, the remaining 35,000 employees of both the airlines will come together over a period of three years.

Two options were put forth by the consultants hired, according to sources in the civil aviation ministry, at a presentation made to Civil Aviation Minister Praful Patel and the Chairmen and Managing Directors (CMDs) of both AI and IA, V. thulasidas and V. Trivedi, on October 13. The first was to bring together only top executives at the level of Director and above in the first phase. That was shot down on the ground that there were only 52 such people taking both companies, which did not represent "a minimum critical mass o f employees". Nor did those in such senior positions have much to do with the mass of their employees.

The option chosen was the second which suggested the entire senior management cadre, of around 800, be brought together at one go. Though no rentrenchment is contemplated, the staggered integration of the remaining employees is obviously to minimise the chances of the unions of both airlines coming together to oppose the scheme. 

The tantalising question of which company will merge into the other, or what the new entity will be called however has been left open. Their combined assets on merger has been valued at Rs 14,000 crores, with IA holding the larger share of Rs 8000 crores, chiefly because of the real estate it owns in almost every state capital, unlike AI whose offices are restricted to only a few cities.

Email:arunkumar@hindustantimes.com, gaurav.choudhury@hindustantimes.com