VRS, ESOPs on the cards for Air India employees: Jayant Sinha

MoS (civil aviation) Jayant Sinha said the disinvestment is designed to ensure integrity and confidentiality at every stage of the Air India sale

New Delhi: The government will take a host of steps to protect the interests of Air India employees after the sale of a 76% stake in the national carrier, the details of which are being worked out in talks with staff unions, minister of state for civil aviation Jayant Sinha said in an interview.

The minister also said that the disinvestment, expected to be consummated by September, is designed to ensure integrity and confidentiality at every stage of the Air India sale.

The employee protection plans under consideration include a voluntary retirement scheme (VRS), an employee stock option (ESOP) scheme, a government-funded scheme to meet the medical expenses of retired employees and settlement of past dues from the merger of Air India and Indian Airlines.

“Now that the disinvestment process has kicked off, we have started formal negotiations with various worker unions including multiple pilot unions, cabin crew unions and engineers’ union. In consultation, we will determine the right level of protection and who should bear the cost. It is possible some employee protection cost may be provided by the government,” the minister said, adding that one example is the medical expense of retired employees.

The period of protection for employees from the date of consummation of the transaction as well as the terms of VRS will be given in the request for proposal (RFP).

“There are two parts to a VRS. One, how long the employee will be protected after the transaction closes legally. We are still a year away for the transaction to close. The second issue is the terms of the VRS. Those are some of the things we are looking at right now.” said Sinha.

Employees will be offered ESOPs from the government’s residual stake of 24%.

“The principle is that every employee should feel she has a significant material stake in the company’s future prospects,” the minister said.

The government will also settle the back wages of employees specified by a panel, amounting to Rs1,298 crore, prior to the transaction. The minister said that Air India’s head count of about 11,000 permanent employees is within industry standards. About 37.6% of employees will be retiring in the next five years, Sinha said, adding that it would not be correct to say that employee cost of Air India is in any way out of line with industry benchmarks.

Policymakers have taken special care to ensure that the divestment process is above criticism. “There is sufficient oversight at every stage by different committees so that both the integrity and confidentiality of the process is fully protected at all times,” said Sinha. Although an independent valuer will give a reserve price for the Air India stake on sale, it will be kept confidential from everyone till the bids are open, as is the standard practice.

“Reserve prices are never made public before bids are open. It is illogical to do so,” a former secretary to the government, who has headed the disinvestment department, said on condition of anonymity.

Sinha clarified that only interest-bearing debt of Rs24,576 crore will remain with the companies after the stake sale. This was decided based on the sustainability of the enterprise going forward, what is backed up by collateral and what is fair for the successful bidder to hold.

Sinha also said that any non-aviation company meeting the eligibility criteria could also bid for the company. “Air India has the expertise to run an airline as it does today. What we need is an investor with the necessary management and financing expertise,” he added.

Industry watchers said disinvestment is likely to make the national carrier more competitive. “Privatization is likely to improve operational efficiency of Air India, thereby helping it compete more effectively and help build sustainable profitability,” said Kinjal Shah, vice-president of corporate ratings at credit rating agency Icra Ltd.

The government is also on a massive infrastructure expansion programme in line with the growth in air travel. “Today people are taking 250 million trips a year. We are planning for a billion trips a year over the next 15-20 years and various experts have indicated that the investments needed for it would be about Rs3-4 trillion,” said Sinha.

Civil Aviation Minister lauds AAI for its achievements

Civil Aviation Minister Jayant Sinha has congratulated the Airports Authority of India (AAI) for its achievements in fiscal 2017-18.

Addressing AAI staff and their families during the 23th Annual Day celebrations of the AAI, Sinha said India is witnessing unprecedented growth in the aviation sector and requires skills to ensure a bright future.

He also felicitated Ahmedabad, Kolkata, Lucknow, Chennai, Pune and Indore airports for making their mark in the Airport Council International-Airport Service Quality Awards-2017.

The minister also felicitated the Dehradun, Udaipur, and Raipur Airports for making its mark in the CSI awards.

Sinha said, “What you have accomplished in the last one year, is nothing short of remarkable, it has been a fantastic year for the Airports Authority of India and you deserve a tremendous round of applause for the fantastic year. One of the very important things we did in the budget this year, and which I have been working with your leaders in the Airports Authority of India, is ‘How do we equip ourselves and prepare ourselves?’ and ‘How do we make sure not to accommodate 200 million passenger trips, but one billion passenger trips, that is the target we have to set for ourselves over the next 15 to 20 years.”

The Chairman of Airports Authority of India, Guruprasad Mohapatra spoke about AAI’s achievements in the last financial year.

He said, “We have not only excelled on the infrastructure front by dedicating several buildings at Gorakhpur, Belagavi, Hubli, Jammu etc to the nation, operationalising the central Air Traffic flow management to balance the demand and supply of the air and on the airports, cars isle system in Kolkata to reduce the difficulties faced by the travelling public due to fog and bad weather conditions, but came out with flying colours for providing customer satisfaction to the travelling public. I am elated to share that our continuous efforts towards improving passenger conveniences like the ambience at airports, clean toilets, local outlets at airports and providing sanitary pad dispensing machines, and many more such initiatives, have not only transformed the airports, but has changed the public perception. These efforts have placed us among some of the best airports across the world.”

The evening was marked by dazzling performances by the famed Zenith Dance Group. They thrilled the audience with an acrobatic and energetic dance performance on the Ganesh Vandanam.

The event then soon took a lighter note as famous comedian, Rajeev Nigam, tickled the funny bone of the audience with his standup comedy.

Finally, Bollywood singer Benny Dayal took centre stage with his soulful voice and got the audience on their feet with his energetic dance numbers.