Air India subsidiaries to start operations from November

In a move that is envisaged as a crucial step in Air India's turnaround strategy, the carrier will shift around 12,000 of its employees in the engineering and ground handling subsidiaries that are set to start operations as new companies from next month.

The ground handling unit will be called Air India Transport Services Ltd (AITSL) and the engineering unit will be called Air India Engineering Services Ltd (AIESL).

"Of the 12,000 employees, around 7,000 will go to the ground handling and the rest will go to the engineering subsidiary. The employees will be shifted to the subsidiaries on deputation and will remain as Air India employees but any new hiring by these subsidiaries will be on contract basis," said a senior Air India official.

The official further said that these subsidiaries will start operations as separate companies from November 1. " Even if it is delayed, we will start it by November 15," he added.

This shifting of employees will immediately help the national carrier in bringing down its employee per aircraft ratio to global standards.

Currently, the employee strength per aircraft is at 204, which will come down to 113 after the shift. Around Rs 900 crore of the carrier's wage bill will also be transferred to these subsidiaries, which will be run by CEOs and headed by the Air India CMD.

The ground handling subsidiary will get an equity infusion of Rs 393 crore over 12 years from Air India. The engineering subsidiary will get Rs 375 crore over three years.

For the engineering subsidiary, the airline is scouting for a global partner. The ground handling subsidiary will operate in all airports except New Delhi, Hyderabad, Bangalore, Mangalore and Thiruvananthapuram, which is handled by Air India Singapore Airport Terminal Services (AISATS).

Formation of subsidiaries is a part of Air India's turnaround plan. The government has committed an infusion of Rs 30,231 crore in the airline over nine years. The plan also entails restructuring the airline's short-term debt.

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