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Air-India's unions to oppose job cuts after sale

Unions of money-losing Air-India, which is overstaffed compared with its global peers, said on Tuesday they support the long-haul state carrier's partial privatisation but will fiercely oppose job cuts.

"We fully understand and support the partial sale of Air-India as it needs funds, which the government cannot provide," HK Rout, president of the engineers' union said at a news conference. "But we will not stand retrenchments."

The government plans to sell 40 per cent of Air-India to a strategic partner, 10 per cent to employees and 10 per cent to the public and financial institutions. All eight of the airline's unions have sought an assurance from the government that jobs will not be cut in the process.

With a workforce of a little less than 18,000 and a fleet of 27 aircraft, Air-India's employee-to-aircraft ratio stands at about 650, much higher than the industry average of 350.

The airline has posted losses for six years in a row and is saddled with debt totalling Rs 33 billion ($700 million).

There is now just one bidder in the running for buying the strategic stake in Air India -- Singapore Airlines in tandem with India's Tata group, the country's second-largest conglomerate by sales.

New Delhi earlier disqualified the UK-based billionaire Hinduja brothers, three of whom face arms kickback charges in India.

STRINGENT LABOUR LAWS

For the moment, Air India's unions have nothing to worry about. The country's stringent Industrial Disputes Act makes firing very difficult. All companies, whether private or state-owned, must first get the government's permission before laying off permanent staff.

The government has repeatedly postponed pushing through a politically sensitive amendment to this law, which will make firing much easier.

With the amendment still in abeyance, analysts feel the airline's huge workforce is bound to be seen as a burden and lower the price a strategic investor is willing to pay.

But unions disagree, pointing out that staff costs constitute only 19 per cent of the airline's total costs and 21 per cent of its operating costs.

They also see a solution to overstaffing.

"Instead of subtracting from the employees, the investor can add to aircraft, which will bring the employee-aircraft ratio down," said Rout.

But with Air India's high debt-equity ratio, which Rout himself pegs at 12 to one, a massive investment in new aircraft by the eventual buyer of the airline may not be possible soon.

India's privatisation ministry, stung by a near two-month strike earlier this year at the newly privatised Bharat Aluminium Company Ltd, has held a number of meetings with Air-India's unions to allay their misgivings.

Sterlite Industries' purchase of the government's 51 per cent equity in the aluminium company was the country's first big-ticket privatisation.

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