the strategic disinvestment of AI by way of the transfer of management control and sale of 76 percent equity share capital of AI held by GOI, which will include AI’s shareholding interest in the AIXL and AISATS,” said a preliminary information memorandum released by the government.
As part of the disinvestment process, the government will offload 100 percent of its stake in Air India Express (AIXL), 76 percent in Air India Limited and 50 percent equity stake in Air India SATS Airport Services (AISATS). The civil aviation ministry has invited expressions of interest for the loss-making carrier and its two subsidiaries from interested parties by 5 pm on May 14.
Air India management or employees can participate in the bidding process either directly, or by way of forming a consortium, as per the memorandum.
As reported earlier, the government may include a clause in the share purchase agreement to ensure Air India employees do not lose jobs immediately after privatisation.
This would entail that a successful bidder take the employees of Air India and Air India Express on its payroll for a period of one year after the completion of the sale. According to the latest figures available, the two companies together have 13,868 employees. The government has decided to sell the core airline company Air India and its low-cost arm Air Express together.
“Employees cannot be asked to resign. While the private player will be given full independence in taking strategic decisions, employees will be asked to be retained for one year,” a senior government official was quoted as telling a news agency.
The official added that after one year, Air India’s new owner could decide on a voluntary retirement scheme (VRS). However, the government will ensure that the terms of the VRS will be on a par with the employees’ service condition.
A similar model was used for the privatisation of Delhi and Mumbai airports, where there was a clause under which GMR Infrastructure and GVK group had to absorb employees at the two airports for a period of three years. After that, the private owners had to offer employment to 60 per cent of Airports Authority of India employees working at those airports. In 2009, the government had approved the VRS for those who did not join the private airports.
Civil Aviation Secretary Rajiv Nayan Choubey said, “We will protect the interests of Air India employees in a significant manner.”
According to potential bidders, Air India’s labour issues would be cause for concern for potential bidders. Turkish ground handling firm Celebi, which has expressed an interest to buy Air India’s ground-handling unit, said the value of Air India would diminish if the government mandated keeping employees on the payroll. If the government is asking a maximum price for Air India but asks to keep old personnel, it will not match. Not just keeping old personnel, their indemnity is an issue as well,” Cana Celebioglu, board member of Celebi, had said.
The government was earlier considering giving the VRS to non-technical staff but has dropped the idea. It is betting on the fact that a significant number of Air India employees are close to the retirement age, which would mean that a large share of employees will retire soon. The average age of staff at Air India is 55 years, against the retirement age of 58.
In total, Air India and its five subsidiaries have around 22,000 employees, of whom Air India has around 12,000. It includes 897 pilots and 2,750 cabin crew who are termed technical employees. The rest comprises non-technical staff working in ground handling and management.