Business News
Puri says- Air India buyer must retain employees for a lock-in period.
The government had on 27 January invited expressions of interest from investors for its entire stake in Air India
Highlights :
- Air India has 9,426 permanent workers, 4,201 contract employees and 2,867 employees on deputation
- The government had on 27 January invited expressions of interest from investors for its entire stake in Air India
NEW DELHI : The winning bidder of Air India Ltd will have to retain existing employees of the state-run airline for a negotiated time-frame so that they do not face any uncertainty after privatization, civil aviation minister Hardeep Puri said.The government wants Air India to continue to operate under its own brand, the minister said, adding its viability and success would depend on the workforce that would be an asset to the new owner.
“I do not think anyone can run an airline without the people, the engineering staff, the cabin crew, the commander and all of you. There has not been any recruitment for years and therefore, there is no surplus (workforce),” Puri said at a function to felicitate the Air India crew which evacuated Indians from China following the coronavirus epidemic.He said a lock-in period to retain the workers at Air India for a particular period would be negotiated with “whoever is the interested player”. Puri did not elaborate as the divestment process is underway.
The government had on 27 January invited expressions of interest from investors for its entire stake in Air India, along with subsidiary, Air India Express, as well as 50% stake in Air India SATS Airport Services Pvt. Ltd, a joint venture between Air India and Singapore Airport Terminal Services.To sweeten the deal, the successful bidder will need to absorb ₹23,286.5 crore of debt after the government transfers about ₹56,334 crore of debt from Air India and Air India Express to a special purpose vehicle, Air India Assets Holding Ltd.
Air India serves 98 destinations including 42 overseas. It has 121 planes, of which it owns 32 while the rest are leased.It has 9,426 permanent workers, 4,201 contract employees and over 2,867 employees who are on deputation from other companies as on 1 November.
Puri said this time, there is no reason for any doubt about a successful stake sale. An attempt to sell a 76% stake in the debt-ridden national carrier failed in 2018.“Don’t be under the impression that there will be any problem. The amount of interest I am seeing (in Air India), I am reassured,” he said without elaborating on the potential investors. Officials in the ministry said they were not supposed to know finer details of the bidding process conducted by transaction advisor Ernst & Young Llp India.
Puri also said the government was determined to do more to make the business environment more beneficial for airlines. He said while airports and ancillary companies in the aviation sector are profitable globally, airlines are more prone to business challenges.
“Maybe it has something to do with the business model. It is unlikely that we will be able to correct the global phenomenon, but let me tell you, we are determined to correct the ecosystem so far as India is concerned. What the government can do is to make the ecosystem, the business environment in which airlines operate, much easier for them, especially for Indian carriers. We can rationalise the tax structure and make sure aviation turbine fuel (ATF) is available at a more reasonable price,” the minister said.
