Air India's Turnaround Plan: Hiving Off Subsidiaries and Resolving Outstanding Issues

Strategic Insights -

As part of its turnaround plan, Air India is likely to hive off its Maintenance, Repair and Overhaul (MRO) business and ground handling business into two separate subsidiaries, potentially absorbing a significant portion of its 40,000-strong workforce. The MRO business is expected to absorb around 11,000 employees, while the ground handling business will absorb another 8,000 workers. This move aims to create two separate profit centers for the airline and absorb non-core business employees.

Key Takeaways:

  • Air India's MRO business is expected to absorb around 11,000 employees, while the ground handling business will absorb 8,000 workers.
  • The airline's turnaround plan involves hiving off its MRO and ground handling businesses into two separate subsidiaries.
  • The proposed hiving off is awaiting clearance from Civil Aviation Minister Vayalar Ravi, with the proposal likely to be sent to the Cabinet Secretariat by the end of the month.
  • Air India is expected to receive its first two Dreamliner aircraft in October this year, followed by two in November and one in December.
  • The airline owes Rs 136 crore to Kingfisher and Jet for its ground handling operations, and the ministry is pushing for the two airlines to clear their dues.
  • The ministry is also actively resolving outstanding issues with various stakeholders, including a compensation dispute with Boeing for the delay in delivery of 27 Dreamliner aircraft.

Statistics:

  • Air India's workforce: 40,000
  • Employees to be absorbed by MRO business: 11,000
  • Employees to be absorbed by ground handling business: 8,000
  • Total compensation demanded by Air India from Boeing: $710 million
  • Compensation committed by Boeing: $145 million
  • Air India's accumulated losses: Rs 13,300 crore

Sources:

  • The Indian Express Online Media Ltd. (undated)
  • Contify.com (undated)