Air India’s (AI’s) plan to shift employees to its proposed strategic business units (SBUs) will bring down its annual salary burden by almost half to Rs 1,569 crore. The struggling state-owned carrier spends Rs 3,100 crore a year on wages and salaries.
It plans to have two subsidiaries, one on ground handling (GH) and another on engineering, and shift around 18,000 staff from the parent company.
“The GH subsidiary will take 7,465 people and the engineering subsidiary will hire 10,481 people without changing any terms and conditions. The shift will shift a wage bill of Rs 931 crore to the engineering wing and over Rs 600 crore to the GH wing,” said a senior civil aviation ministry official, who did not want to be identified.
The formation of the SBUs will need the Cabinet approval. “We are pushing and want it to happen soon,” the official said.
AI is also scouting a global partner for its engineering subsidiary. It already has a ground handling joint venture with Singapore Airport Terminal Services, Air India SATS Airport Services (AISATS).
Its earlier plan to shift staff to AISATS did not fructify because the subsidiary refused to take staff on existing terms and conditions. It preferred to hire on contract and on Wednesday, only 10 per cent of its staff are from AI.
AISATS operates in the Hyderabad, Bangalore and New Delhi airports. Ground handling at all other airports will be handled by the new subsidiary. It will offer services to AI that will be 50 per cheaper compared to what it will charge other airlines.
The engineering SBU will also look at getting third-party business from the Rs 2,000-crore Indian maintenance repair and overhaul industry, expected to see fast growth in the coming years. The current engineering division in the airline only services AI planes.
Earlier, AI had a plan to set up a cargo subsidiary also.
It has accumulated losses of Rs 15,000 crore. It lost Rs 2,226 crore in 2007-08, Rs 7,189 crore in 2008-09 and Rs 5,551 crore in 2009-10. It got Rs 800 crore in 2009-10 and Rs 1,200 crore in 2010-11 from the government. Another proposed infusion of Rs 1,200 crore in this financial year will take its equity base to Rs 3,345 crore.
Hindalco Industries' stock declined about 2% to Rs 110.50 currently after its December 2012 performance failed to cheer the Street. While the ...