Air India engages unions as strikes loom

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Air India has formed a committee to engage its employee unions in the ongoing plans to restructure the state-owned airline, even as if faces up to the possibility of massive strikes that could disrupt its operations next week.

Arvind Jadhav, chairman and managing director of the Indian flag carrier, said on Thursday that the airline would set up a "turn-around committee" comprising nominees from management and the unions. The unions representatives have been asked to "make presentations identifying areas where savings" can be found, the company says in a statement.

This comes after the Indian government agreed to bail out Air India, which posted an $800 million loss for the year ended 31 March and appealed to the state to save it from going under. The airline has to submit a cost-cutting plan, spelling out how it plans to reduce labour costs, cut capacity, and streamline aircraft maintenance and ground-handling services, to a cabinet-level panel within a month.

It had already said that it plans to cut 5 billion rupees ($103 million) from its total annual wage bill of 30 billion rupees. It is also re-examining wage agreements, including flying allowances and productivity linked incentives, between management and unions. It also wants to improve productivity, eliminate restrictive work practices, and reduce wasteful expenditure.

Even as the government exhorts it to become a "leaner operation", Air India's employees are up in arms against the proposed changes. The unions are especially insistent that existing wage agreements should not be re-negotiated, and sit-in protests took place in front of Air India offices on Friday. There could be further industrial action next week, they warn.

Air India deferred paying salaries by two weeks from mid-June due to a cash crunch, and unions representing 24,000 employees say that their members will go on strike if they are not paid on 30 June. Air India's operations could grind to a halt next week if they go ahead, say sources close to the carrier.

Indian government statistics showed that the country's domestic passenger market shrank 11% in May, with Air India trailing Kingfisher Airlines and Jet Airways/JetLite in third place with just 18% market share. Air India's load factor was 69%, the lowest among all Indian carriers.