New Delhi: Air India has introduced a voluntary retirement scheme (VRS) and a voluntary separation scheme (VSS) for its employees, as a precursor to its upcoming merger with Vistara.
According to the scheme details reviewed by ET, permanent employees with a minimum of five years of service are eligible for the retirement package, while those with less than five years can opt for the separation scheme.
Insiders estimate that around 700 employees will participate in these schemes.
Currently, Air India employs approximately 18,000 individuals, and its affiliate Vistara has a workforce of about 6,000.
Those opting for the schemes will receive compensation based on the more favourable of the Gujarat model or the Department of Heavy Industries model.
An Air India spokesperson has confirmed the initiation of these schemes.
The merger, which combines the government-formerly-run Air India with Vistara, is part of the conglomerate’s strategy to overhaul its airline operations, which reported a loss of Rs 15,532 crore in FY23. The strategy aims to capitalize on synergies, enhance efficiencies, and minimize overlap. As part of this strategy, the budget airlines Air India Express and AirAsia India have merged into a single entity. The merged Air India and Vistara will serve the full-service airline market.
Officials have indicated that the merger has led to role redundancies and duplications, prompting the introduction of the schemes.
Sources say that employees from both airlines have been assessed for their roles, and the merger will affect some positions. In addition to offering compensation, the Tata Group is endeavouring to reassign as many affected employees as possible within its other businesses.
A combined team of senior executives from both Air India and Vistara, with assistance from the consultancy firm BCG, is managing the integration of human resources, while the law firm AZB Partners oversees legal and regulatory matters.