IndiGo's Decision To Cut 10 Per Cent Workforce Could Be A Sign Of Things To Come
Airline companies in India were not among the most profitable ones and COVID-19 and travel restrictions that followed made the situation even worse.?
Though air travel has resumed in the country, the industry does not expect it to go back to normal for at least a couple of more years. And that has put the airlines in a tough spot.?
IndiGo, the largest private career by fleet and passenger volume has announced that it is letting go around 10 per cent of its current workforce.
According to IndiGo CEO Ronojoy Dutta, the company after carefully assessing and reviewing all possible scenarios, will require to bid "a painful adieu" to 10 per cent of its around 27,000-strong workforce.
"It is for the first time in the history of IndiGo that we have undertaken such a painful measure. This is indeed a very unfortunate turn of events from the optimistic growth trajectory we had carved out for ourselves just six months ago; but this pandemic has forced us to re-evaluate our best laid plans.
"To help the impacted employees' tide over the uncertainties emanating from this decision, IndiGo has created a '6E Care package'," Dutta said in a note.
Dutta said the current pandemic has impacted many industries around the world, among which aviation has been one of the sectors that has been hit the hardest.
"Even now, IndiGo is flying only a small percentage of its full fleet of 250 airplanes. This has been one of the toughest decisions that we have had to take and we are ensuring that the transition process for the impacted employees is carried out seamlessly, professionally and with the utmost respect and compassion," he said.
"Right at the start of this crisis, IndiGo understood the gravity of the situation. For us, it was critical to minimise the impact of the pandemic on our employees, and in fact IndiGo was one of the few airlines globally which paid full salaries for the month of March and April, despite the disruption in business," Dutta added.
There is a growing fear that this is a sign of things to come in the industry.?
"The decision by @IndiGo6E to lay off 10 per cent of its staff is the beginning of a painful process for Indian aviation as things start to unravel from the impact of #COVID19India. It will be impossible to survive this crisis without a strong balance sheet (for the domestic airlines)," CAPA India said in a tweet on Tuesday.
In another tweet, it said industry conditions are such that one or more airline failures appear inevitable.
Airlines have limited options to turn to for funding except their promoters, given that third-party investors will be reluctant to provide capital right now, and the government is unwilling to do so, it further said in the tweet.
Projecting losses to the tune of Rs 1-1.3 lakh crore over the financial years 2020-22 for the domestic airlines, CRISIL Research last week said curtailed mobility of people due to the pandemic and related restrictions will squeeze domestic air passenger traffic by 40-45 per cent in 2020-21.
