Air India is working on a plan to cut costs, including reducing staffing costs and thereby the dependence on government largesse, a top executive said on July 16.
“We are trying to increase the topline, and are trying to contain costs,” said Chairman and Managing Director Rajiv Bansal, addressing a media conference, along with Civil Aviation Minister Hardeep Singh Puri.
Bansal added that the airline is working on four fronts to reduce costs – reduce debt, cut on lease rentals, trim staffing costs and lessen operating costs.
As part of the bringing down staff costs, Bansal said the airline has laid off employees whose stints were extended after retirement. “We are in talks with pilots, cabin crews and other employee categories,” he said.
Earlier this month, the airline’s board empowered the CMD to send employees on leave without pay, for up to five years. Furthermore, Moneycontrol learns that the carrier may soon announce another round of pay cuts, which will be much steeper than the first one.
On lease rentals, Bansal said the airline is in talks with its lessors and there has been an ‘initial headway.’ The top executive added that talks are also on with hotel and transport providers, to review terms.
The steps are being taken, he said, “to reduce dependence on government support.”
Since 2012, the airline has got financial aid of over Rs 30,000 crore from the government.
The attempts to save costs come even as the government continues with the divestment plans for Air India. In June again, the government was forced to further push dates, the third time since the process to divest the national carrier began in January.
But Minister Puri reiterated again that there was no other way, but to continue to look for the airline’s privatisation. “We are persisting with privatisation. There is no choice,” he said, and added that it’s not possible for the government to keep helping Air India through financial aid.
In the 2019 financial year, Air India had reported a loss of Rs 8,556 crore, up from a net loss of Rs 5,348 crore a year earlier.
The Minister defended steps taken to reduce Air India’s workforce, reiterating that this was needed to keep the airline flying.