Air India mulls VRS to cut flab
Will a voluntary retirement scheme (VRS) be the solution to Air India’s (AI) woes?india Updated: Oct 24, 2011 02:05 IST
Will a voluntary retirement scheme (VRS) be the solution to Air India’s (AI) woes?
The issue, government sources told HT, is being “actively considered” by a group of officers (GoF) from the finance ministry, which is vetting AI’s turnaround and financial restructuring plan.
GoF’s report, likely to form the blueprint for future equity infusion into AI, would be placed before a Group of Ministers expected to meet on October 27.
The ailing carrier, saddled with debts of around Rs 48,000 crore, has a workforce of around 40,000, out of which 30,000 are permanent employees and the rest are on contract. Its annual wage bill is more than Rs 3,000 crore.
The state-owned carrier has a fleet of 165. Its employee-aircraft ratio is 243:1 compared with the industry average of 150:1.
“It is better to pay off an underperforming employee with VRS than to have him stay on and being a dead weight,” said Captain Mohan Ranganathan, member of a government committee on aviation safety. “VRS is a good way for AI to cut its losses. It is true that they are overstaffed.”
The GoF, as earlier reported by HT, is likely to recommend a bailout package of Rs 26,000 crore for AI through a mix of debt transfer and equity infusion.