Govt stake may fall below 20% once ESOP pool is created for Air India staff

Air India employees may get stock optionsin the airline after it is privatised. The government is planning to create an employee stock pool from the 24 percent stake it will hold in the airline.

On Wednesday the government announced that it will divest 76 per cent stake in the national carrier.

“Permanent employees will be given stock option in the company, it will be given from the residual stake the government will hold in Air India,” said a senior government official. This, along with an assurance of job continuity for the next one year is the government’s step to assure the employees the official said.

 According to the information memorandum released by the government, the airline has 11,214 permanent employees. Of that, around 37.6 percent will be retiring in the next five years.

The officials said that the employees exercising the ESOP option will be able to monetise the stock when the airline is listed in the stock market. As part of the disinvestment process, the government has made it mandatory for the successful bidder to list the airline three years after assuming management control. “ After creating the ESOP pool, government holding will fall to around 20 percent, rest will be sold off the government in parts,” the official said.

Further to assuage the employees, the government has decided to pay all pending salaries to employees before the disinvestment process is completed. As a part of the recommendation of Justice Dharmadhikari committee in 2012, there was a salary revision- the benefit of which has not been passed to the employees completely. “ The employee dues of Rs 12,982 million is in the nature of past arrears and Air India Asset Holding Limited will commit to pay the same at appropriate stage before consummation of the proposed transaction,” the official said.

The government is betting on the fact that it will be conducive for the new owner to give VRS after one year as a significant number of Air India employees are close to the retirement age.
 

“The company’s average age of staff is 55 years, which means if provided a generous and just VRS package, they will accept it. The technical staff is highly sought after in the market and hence, the market will be ready to absorb them,” a second government official said.

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.