IndiGo Announces Layoffs To Cut Costs Even As Some Flights Resume
An aircraft operated by IndiGo, a unit of InterGlobe Aviation Ltd., stands at Terminal 3 of Indira Gandhi International Airport in New Delhi, India. (Photographer: T. Narayan/Bloomberg)

IndiGo Announces Layoffs To Cut Costs Even As Some Flights Resume

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IndiGo has decided to lay off 10% of its workforce due to the economic crisis caused by the coronavirus pandemic, the chief executive officer of India’s biggest airline said.

"From where things stand currently, it is impossible for our company to fly through this economic storm without making some sacrifices in order to sustain our business," Ronojoy Dutta said in a statement on Monday. "It is for the first time in the history of IndiGo that we have undertaken such a painful measure (of layoffs).”

As on March 31, 2019, the airline had 23,531 employees on its payroll.

The "impacted employees" will be given "notice pay", calculated on the basis of gross salary, in lieu of serving notice applicable to them, Dutta said. They will also be paid a severance pay, which will be calculated as one month of CTC (cost to company) for every completed year of service, subject to a maximum of 12 months.

This means that if an employee has been working with IndiGo for six years, he or she will be getting an amount equivalent to six months' gross salary as severance payment. However, those who have worked for 12 years or more with the company will get a fixed amount equivalent to one year's gross salary CTC as severance payment.

"At a minimum, an impacted employee will receive at least three months' gross salary, including both the above payments. Those with higher tenure with the company will receive more as per the above calculation method," he said.

The aviation sector has been significantly impacted due to travel restrictions imposed in India and other countries in view of the coronavirus pandemic. All airlines in India have undertaken cost-cutting measures, such as pay cuts, furloughs and layoffs, to conserve cash.

Dutta said annual bonus and performance-linked incentive will be paid to impacted employees whenever the airline decides to make this payment to the rest of the employees during this financial year.

"Medical insurance coverage for impacted employees will be extended until December 2020. There shall also be a provision to continue with the policy post December 2020 as per applicable market rates," he said. If the impacted employees need to travel back to their hometown, IndiGo will assist them with a one-way confirmed air ticket.

India resumed domestic passenger flights from May 25 after two months of shutdown. The airlines have been allowed to operate at 45% of their domestic flights. Occupancy rate in Indian domestic flights has been 50%-60% since May 25. International flights continue to remain suspended.

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