Air India rolls out second voluntary retirement scheme for non-flying staff

Radhika Bansal

18 Mar 2023

Air India has offered a voluntary retirement scheme (VRS) to its staff, excluding pilots, cabin crew, and security staff. This is the second such offer since the takeover of the airline by the Tata Group in January 2022 and will remain in force till April 30.

The VRS offer will be available for permanent general cadre officers who have attained the age of 40 years or above and completed a minimum of five years of continuous service at the airline. Clerical and unskilled categories of employees who have completed a minimum of five years of continuous service at Air India will also be eligible to opt for VRS.

A communication, sent out to staff by Chief Human Resources officer S.D. Tripathi on Friday, March 17 said: "We had launched the first phase of VR in June 2022 and subsequently there has been a request from employees for extending the additional benefit of voluntary retirement to other permanent employees as well. In response to this, we are announcing phase II of voluntary retirement."

"The employees who apply for voluntary retirement from 17th March 2023 to 30th April 2023 will also be provided with an ex-gratia amount as a one-time benefit. Eligible employees who apply up to 31st March 2023 will receive INR 1 lakh over and above the ex-gratia amount," it added.

Air India CEO Campbell Wilson, in an internal communication, also informed about the voluntary retirement offer. He said that following last year's provision of voluntary retirement of permanent cabin crew, clerical and unskilled staff aged over 40, "many of us have asked whether there will be another round and whether it would be extended to other staff categories. Today, we're launching a second phase of voluntary retirement".

Sources said that nearly 2,100 employees meet the criteria to avail of the latest voluntary retirement offer. Air India's current workforce stands at nearly 11,000, which includes flying and non-flying staff.

In June 2022, the airline announced its first phase of voluntary retirement covering cabin crew, clerical and unskilled categories. At that time, around 1,500 staff members had opted for voluntary retirement offers which were 43% of about 4,200 eligible members. Last November, the airline allowed its cabin crew who had opted for voluntary retirement to extend their tenure until January amid a shortage of cabin crew.

Recently, Air India announced a mega order to purchase 470 aircraft from Boeing and Airbus to support its growth plans. It has already announced plans to lease 36 aircraft of which two B 777-200 LR have already joined the fleet. Following the deal, Air India plans to hire over 4,200 cabin crew trainees and 900 pilots in 2023 as the airline adds new aircraft and rapidly expands its domestic and international operations.

After 69 years as a government-owned enterprise, Air India and Air India Express were welcomed back into the Tata group in January 2022. The present management at Air India is driving the five-year transformation roadmap under the aegis of Vihaan.AI to establish itself as a world-class global airline with an Indian heart. The plan is aimed at putting Air India on a path of sustained growth, profitability and market leadership.

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Defence Ministry approves capital acquisition of military hardware worth INR 70,500 crore; HAL bags big orders

Radhika Bansal

18 Mar 2023

To boost the Atmanirbhar Bharat policy in the defence sector of the nation, Defence Acquisition Council and Defence Minister Rajnath Singh have approved proposals to procure INR 70,000 crore worth of different weapon systems for the Indian defence forces. The deal includes the purchase of 60 UH Marine choppers from Hindustan Aeronautics Limited (HAL), worth INR 32,000 crore.

Out of the total proposals, Indian Navy proposals constitute more than INR 56,000 crore, which largely includes indigenous BrahMos missiles, Shakti Electronic Warfare (EW) systems, Utility Helicopters-Maritime etc.

This apart, 60 'Made in India' Utility Helicopters Marine & BrahMos supersonic cruise missiles for Indian Navy, 307 ATAGS howitzers for Indian Army, and 9 ALH Dhruv choppers for Indian Coast Guard will be bought in accordance with the approved proposals.

The council also accorded AoN for the procurement of Advance Light Helicopters (ALH) MK-III from Hindustan Aeronautics Limited (HAL) for the Indian Coast Guard. The Helicopter will be able to carry a suite of surveillance sensors which will enhance the surveillance capabilities. It will also give full night capability and Instrument Flight Rules (IFR) capability for the operations of the Indian Coast Guard, said the Ministry in its official press release.

The month has been going favourably with HAL. Interestingly, on March 10, the ministry inked a Rs 667-crore contract with HAL for 6 Domier-228 aircraft for the Indian Air Force, causing the HAL stock to surge. Earlier this month, the Union Cabinet approved the purchase of 70 HTT-40 primary trainer aircraft from HAL for Rs 6,828.36 crore.

HAL chairman and managing director CB Ananthakrishnan recently revealed that it has an order book worth Rs 84,000 crore and an order pipeline worth another Rs 50,000 crore.

HAL stock opened nearly 4% higher on Friday's early trade at Rs 2,830.

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Jefferies assigns an ‘underperform’ rating to IndiGo; projects a 13% stock decline

Radhika Bansal

17 Mar 2023

According to brokerage firm Jefferies, IndiGo, which currently enjoys a dominating position in the fast-expanding aviation market, is likely to experience difficulties in the medium term as new and established operators add capacity in the LCC (low-cost carrier) segment.

Even though decreased fuel prices might offer some short-term comfort, Jefferies predicts that this would certainly lead to earnings challenges. The firm has downgraded the stock to a "underperform" rating and lowered its target price to INR 1,615, which is a 13% decrease from the stock's current market value.

There is no chance of missing out on traffic growth because of the huge aircraft orders currently being placed in the sector. The overhang of a stake sale by a co-promoter is also a worry, according to Jefferies.

Jefferies assigns an ‘underperform’ rating to IndiGo; projects a 13% stock decline

ALSO READ - Rakesh Gangwal & family divested a 2.74% stake in IndiGo for INR 2,004.77 crore

IndiGo co-promoter Rakesh Gangwal, who holds a 37% stake in the company, including affiliates, had announced his intention to leave the board and gradually divest his holdings over five years starting in 2022. He has already sold around 7% of his holdings in the past six months, and the ongoing periodic sales are expected to weigh on the stock, analysts say.

IndiGo's current market share is around 56%, with the company consistently trying to increase its domestic market share by focusing on on-time performance, competitive pricing, and cost-cutting strategies. Over the past decade, the competitive landscape has also worked in its favour, with full-service airlines pursuing strategies that were not in line with the expectations of price-sensitive customers.

In the past, airlines in India have focused on lower pricing to increase demand and gain market share. However, full-service airlines, such as Jet Airways and Kingfisher Airlines, lost market share and eventually failed. Meanwhile, no-frills airlines, such as Air Deccan, SpiceJet, and IndiGo, emerged as early players in the market.

Recently, after being taken over by the Tatas, Air India has announced plans for separate brands for no-frills and full-service operations. New entrant Akasa also follows a low-price strategy, while SpiceJet is eyeing a revamp, following targeted fundraising.

ALSO READ - From A350s to B777Xs, Air India finalizes the Historic 470 Aircraft deal with Airbus & Boeing

Despite the seemingly large combined market share of IndiGo and Air India, increasing competition is imminent as most players, new and old, adopt similar low-price strategies to capture market share.

ALSO READ - IndiGo reportedly in talks with both Boeing & Airbus for around 500 aircraft

Following Air India's recent large aircraft order, the industry's total order book has expanded to 1,250-1,300 planes, almost double the current fleet of approximately 700 planes.

ALSO READ - Indian carrier expected to order over 1,100 planes

This suggests that the industry may witness low to mid-teen capacity addition over the next decade, although near-term supply-chain challenges may provide some protection, the Jefferies report added.

In an extreme downside scenario, Jefferies expects the IndiGo stock to fall 35% amidst a higher-than-expected increase in competition, which is likely to result in a sharp decline in yields. Passenger volume growth is also likely to be under threat due to an urban slowdown.

"Resultant operating EBITDAR should see an EBITDAR CAGR at 41% over FY23 to FY25. We value IndiGo at 6x Mar-25E EBITDA to arrive at a profit target of INR 1,200,” it said.

ALSO READ - IndiGo is “back with a bang” with several incoming international flights

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GMR Group in talks with lenders to refinance debt for Goa & Hyderabad airports for USD 4 billion

Radhika Bansal

17 Mar 2023

According to those with knowledge of the situation, the GMR Group has started negotiations with lenders to refinance the about INR 4,000 crore in debt that the two operating subsidiaries that manage the airports in Hyderabad and Goa owe.

A portion of the debt raised for the expansion of the Rajiv Gandhi International Airport in Hyderabad would be refinanced with the help of INR 2,500 crore, which will go to GMR Hyderabad International Airport Limited (GHIAL). The remaining INR 1,500 crore would be used to refinance the debt of GMR Goa International Airport Ltd (GGIAL), the company in charge of running the recently opened Manohar International Airport in Mopa, north Goa. According to the aforementioned sources, it is unclear if the borrowing will take the form of bonds or bank loans.

GMR Group in talks with lenders to refinance debt for Goa & Hyderabad airports for USD 4 billion

Flights started at Mopa airport in January. Phased operations have begun at a new Hyderabad airport terminal. That prompted rating agencies to issue a favourable outlook for both units in recent weeks with project execution risk declining. Crisil upgraded the credit rating of GGIAL earlier this month to BBB+ from BBB- with a stable outlook.

"Rating action is on account of the commencement of airport operations and traction of traffic operations, leading to reduction of implementation and offtake risk," a Crisil note said. Similarly, ICRA reaffirmed the credit rating of GHIAL at AA with a positive outlook earlier this month. "GHIAL has started opening the new terminal in a phase-wise manner from Q2 FY2023, thereby reducing the project execution risk substantially," it noted.

Rating agencies have also taken a favourable view of the companies in light of the GMR Group's track record in operating airports such as the country's busiest one in New Delhi. In the case of Mopa airport, Crisil highlighted demand risk due to this being the coastal state's second one. The Dabolim facility, 60 km away, continues to operate.

"This exposes GMR Goa to competition risk for passenger volumes and hence can impact demand and pricing for non-aero and commercial property revenue streams," the rating agency noted. In the case of Hyderabad airport, there is continued project offtake risk as it's in the middle of a massive expansion to increase capacity from 12 million to 34 million passengers a year, ICRA noted.

The company has USD 300 million of bond repayments due in April 2024 and another debt maturing in February 2026. In December, GHIAL had partially refinanced its USD 300 million, 5.375% notes with domestic non-convertible debentures of INR 1,150 crore at a lower rate of interest with a tenor of 10 years, as per the March 1 ICRA noted.

A subsidiary of GMR Airports Limited and a step-down subsidiary of GMR Airports Infrastructure Limited, formerly known as GMR Infrastructure Limited (GIL), GMR Hyderabad International Airport Limited (GHIAL) announced that it had effectively raised funds on March 13, 2023, through the issuance of 10 years Listed, Rated, Redeemable, Secured Non-Convertible Debentures (NCDs) for INR 8.40 billion through a private placement. On BSE Limited, the NCDs will be listed.

(With Inputs from The Economic Times)

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Boeing & Airbus increasingly looking to India for highly-skilled, low-cost engineers

Radhika Bansal

17 Mar 2023

Boeing Co. and Airbus SE are increasingly looking to India for highly-skilled, low-cost engineers to meet a boom in demand for aircraft and expand their manufacturing presence in the world’s fifth-largest economy.

Airbus plans to hire 1,000 people in India this year out of 13,000 globally. Boeing and its suppliers, which already employ about 18,000 workers in the nation, have been growing by some 1,500 staff every year, the US jet manufacturer’s India head Salil Gupte said in an interview.

With about 1.5 million engineering students graduating annually, India is a rich source of talent for plane makers facing record orders from airlines as travel surges again after the Covid pandemic. Boeing can hire an engineer in Bengaluru, India’s southern tech hub, for 7% of the cost of a similar role in Seattle, according to salary data compiler Glassdoor.

The country has Boeing’s second-biggest workforce worldwide, Gupte said. “Companies come to India for the incredible talent in innovation, not just in technology and software, but also in hard engineering and increasingly in manufacturing,” he said at the Aero India show in Bengaluru last month.

Boeing and Airbus increasingly looking to India for highly-skilled, low-cost engineers

Alongside the hiring push, Boeing and Airbus are also establishing some production in India, which is pitching itself as a less politically fraught alternative to China.

ALSO READ - Boeing & GMR collaborate to build freighter aircraft conversion line in Hyderabad

Boeing signed a partnership with GMR Aero Technic Ltd. on March 10 to convert passenger jets to freighters in the southern Indian city of Hyderabad, where it already has a facility making vertical fins, which stabilize planes. The plant, employing over 900 engineers and technicians, also produces Boeing AH-64 Apache helicopter structures, including fuselages for customers worldwide.

Airbus has also been touting India’s manufacturing prospects as it hires in the country. In October, Prime Minister Narendra Modi attended a ceremony in his home state of Gujarat to mark the start of construction of a facility where Airbus Defence & Space SA and a unit of local conglomerate Tata Group will make C-295 transport aircraft for the Indian military.

ALSO READ - From A350s to B777Xs, Air India finalizes the Historic 470 Aircraft deal with Airbus & Boeing

The nation is an emerging market for sales, with the revitalized Air India making a blockbuster order for 470 aircraft last month, split between the planemakers.

“The time is right for India to turn into an international hub,” Airbus Chief Executive Officer Guillaume Faury said at the time of the aircraft order. “India is well on its way.” A vast pool of educated, English-speaking talent adds to India’s appeal as a hiring ground.

ALSO READ - Airbus CEO meets PM Modi; plans to deepen industrial presence in India

Airbus employs more than 700 people at an engineering center in Bengaluru, and over 150 others in customer services there as well as in the capital New Delhi. India has a “unique ability” to support the company with its skilled manpower, an Airbus representative told Bloomberg, adding that hiring in the country was “not really” coming at the cost of jobs in other locations.

ALSO READ - Boeing India to open its second-largest Engineering & Technology campus near Bangalore Airport

A Boeing representative said the planemaker leverages India’s talent for engineering, technology and research and development. The company has said it plans to hire 10,000 people globally this year after adding nearly 15,000 in 2022, with a focus on engineering and manufacturing.

Still, the Seattle Times reported last month that Boeing will cut about 2,000 jobs, mainly in finance and human resources, but without specifying where. Some of those jobs are being outsourced to Tata’s consulting arm in India.

Gupte defended Boeing’s focus on India hiring, saying a bigger workforce there will help increase jobs in the US. Expanding manufacturing and innovation capabilities in the country will attract more customers and drive up demand for Boeing’s products, spurring employment, he said.

ALSO READ - India becomes Boeing’s largest site outside the US in manufacturing and labour

Boeing tests some of its latest manufacturing technologies in India before rolling them out in US factories, which helps improve production efficiency, according to Gupte, who is based in Delhi. Boeing said in February it is investing INR 2 billion (USD 24 million) in a logistics park in India that will initially cater to local airlines and then a larger network of customers in the region. The planemaker will also set up a support center with dozens of employees for airlines near Delhi.

ALSO READ - Boeing launches Global Support Centre and new Logistics Centre in India

Companies have for decades looked to India to outsource jobs, from trade settlements to travel bookings. The country is home to about 40% of so-called global capability centers that provide tech, engineering and IT support, according to HSBC Holdings Plc.

More recently, there’s been a shift to higher-skilled work for multinationals, including research and business development. The availability of workers in India at “competitive global costs makes offshoring of certain production processes a very real possibility,” said Ravi Srivastava, director of the Center For Employment Studies at the Institute of Human Development in Delhi.

Israel Aerospace Industries, which has worked with partners in India for three decades on air and missile defence systems, drones, satellites and other equipment, is among companies in the sector joining the hiring spree. “I’m amazed by the talent you find here in India. We are hiring new talent all the time,” Danny Lauber, chief executive officer of Israel Aerospace’s India unit, said in an interview. “I have worked in many places around the world, but I haven’t seen such a strong universe of resources.”

ALSO READ - Government encourages Airbus and Boeing to set up final assembly lines in India

(With Inputs from Bloomberg)

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Shirdi Airport to get a new terminal building, apron for INR 527 crore

Radhika Bansal

16 Mar 2023

The Maharashtra Airport Development Company Ltd (MADC), which operates Shirdi airport, has started building a new apron at the airfield due to the huge surge in passenger traffic. To update the current facilities, land marking and testing are now being done.

If finished, the new apron area at Shirdi airport should be bigger and able to hold more aircraft. Three ATR72 and one A320 can fit in the current infrastructure, which measures 225 M x 105 M.

The number of planes that will be parked has not been disclosed by the MADC, which oversees Shirdi airport.

The managing director of MADC and vice-chairman Deepak Kapoor tweeted, "New Apron marking and testing work in ongoing at Shirdi Airport."

An anonymous MADC official added, "After the apron area is entirely finished, we will have an indication of how many aircraft will be occupied.

Aircraft are parked, loaded or unloaded, refuelled, boarded, or maintained in the airport apron area. The apron is not typically accessible to the general public, and a permit can be needed.

Apron areas designed for parking aeroplanes are referred to as aircraft stands.

The MADC has published a tender for the construction of a new integrated passenger terminal facility at Shirdi in addition to the apron. The company that purchases the rights will have two years to build the terminal, which is anticipated to cost 527 crores.

Only 300 passengers can be accommodated at once in the terminal as it is. After Mumbai, Pune, and Nagpur, the airport, which opened in October 2017, is the fourth-busiest facility in the state.

Nowadays, Tirupati, Hyderabad, Bangalore, Chennai, and Delhi are all accessible from Shirdi Airport. The airport handles 64,000 travellers each month.

The usage of the apron may be managed by an apron management service (apron control or apron advisory) to ensure user coordination when the aerodrome control tower does not have control over it.

The tower or ground control, as well as airline handling agents, receive this information from apron control, which assigns aircraft parking stands (gates). Also, it authorises vehicle movement outside of painted road markings, if such movement would obstruct an aeroplane in taxi.