Post-merger, A-I, IA to hire new advisor

Post-merger, Air India and Indian Airlines will hire a change management consultant to enable the employee adapt with new working environment and reorient themselves to deliver better performance.

Air India Chairman and Managing Director Vasudevan Thulasidas said the combined entity will have a change management consultant which will enable employees to be IT-savvy.

"Initially, Air India was planning to hire a change management consultant to help employees in rebranding exercise. Now, we have shelved the plans to go on solo and this will be implemented post-merger," Thulasidas said.

Air India has shortlisted two IT majors TCS and IBM.

Air India now has 15,500 employees while Indian Airlines has 18,000 with a combined fleet of 122. "Though the merged entity will be over-staffed, the expansion in the fleet from 90 to 122 will absorb the surplus human resources," sources said. Consultant majors Accenture and Ambit Corporate Finance are advising the government on merger proposals of the two airlines. Kapil Kaul, CEO, Indian subcontinent and West Asia, Centre for Asia Pacific Aviation, said effective restructuring would be the critical component immediately after the merger process which might include rationalisation of employees. Airline sources said both the carriers were facing shortage in some areas while surplus in certain other areas. The y added: "There could be rationalisation immediately."

Speaking to Business Standard, Air India's Aviation Industry Employee Guild Secretary Sanjay Seth said, "We are not opposing the merger but we are concerned about the HR issues such as seniority and payscale. However, Air India chief has assured us that these issues will be sympathetically looked into."

Industry sources said while Air India had finalised wage negotiations with its employee unions, Indian Airlines was in talks with a few of unions for revising the wages. "The wage revision should be finalised before the merger," the sources said. The government will set up an independent redressal mechanism consisting of representatives from ministry of aviation, department of personnel and public enterprises, they added.

"The selection and appointment of personnel for various responsibilities in the merged entity would be done through a transparent process based on a common criteria," they said.

Civil Aviation Minister Praful Patel had earlier said that the merger would involve no retrenchment, no cuts or losses in pay scale, perks or allowances.

Besides human resources integration, the merged airline, is expected that the combined airliner would have the benefit of increased cost savings and profitability of Rs 820 crore by 2010.

Out of this Rs 810 crore, Rs 410 crore would come from revenue synergies, primarily driven by network integration and Rs 410 crore from cost and capital synergies driven by consolidation and better negotiating power as against integration cost of Rs 200 crore (HR, rebranding & IT), some of which will be one-time cost.

Hence, the merger is expected to enhance the profitability by over Rs 600 crore per annum (i.e. 4 per cent of current combined revenue).