IndiGo announces layoffs, will reduce headcount by 10%

The murmurs have been growing for about a month, that the biggest Indian carrier was looking at a headcount reduction in the wake of the CoronaVirus pandemic which has caused a crash in air-travel demand globally. The airline had initially been very supportive of their employees, paying them in full in the initial days of the pandemic. Currently, IndiGo is flying only a small percentage of its full fleet of 250 airplanes.

IndiGo was one of the few airlines globally which paid full salaries for the month of March and April 2020, despite the disruption in business. Subsequently, IndiGo had to undertake a number of measures such as Pay Cuts, Leave Without Pay and various other costs; but unfortunately, these cost savings are clearly not enough to offset the decline in revenues.

Rono Dutta, the CEO of IndiGo, says, “It is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations. Therefore, after carefully assessing and reviewing all possible scenarios, it is clear that we will need to bid a painful adieu to 10 per cent of our 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’:

  • Financial support
    • Impacted employees will be paid notice pay in lieu of serving notice applicable to them. This will be calculated on the gross salary, basis the employee’s notice period.
    • In addition to notice pay, impacted employees will be paid a severance pay which will be calculated as one month of CTC for every completed year of service, subject to a maximum of 12 months. This will lead to higher cash in hand in comparison to calculations on Gross salary.
    • At a minimum, an impacted employee will receive at least 3-months’ gross salary, including both the above payments. Those with higher tenure with the company will receive more as per the above calculation method.
    • Payment of bonus / PLI shall be made when the Company decides to make this pay-out to the rest of the employees in this financial year, even after the impacted employee’s exit.
    • For the year 2020, longevity bonus shall be paid along with Full and Final to eligible crew members. This bonus is only applicable to cabin crews.
    • Leave Encashment, if any
    • Gratuity, as applicable per Payment of Gratuity act
  • Medical Insurance: 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. For those employees who had covered their parents via the policy, such insurance will also be extended until December 2020. As is currently existing, payment will be borne by the employees.
  • 6E Career transition support: In addition to the financial package outlined above, IndiGo will also provide the impacted employees, an “Outplacement Allowance” to support them seek professional help to explore career opportunities, outside IndiGo.
  • 6E Talent Directory: IndiGo will maintain a directory, which will help them reach out to these employees before anybody else when operations grow again towards normal. IndiGo is committing to first hire such employees back before opening such positions to other applicants.
  • IndiGo will also extend emotional assistance to all affected employees, which I assume, will be the ability to talk to mental health professionals for an extended period of time after they are let go.

Not just that, if impacted employees need to travel back to their hometown or base location, IndiGo will assist them with a one way confirmed air ticket.

Ronojoy Dutta said,

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.  We would like to express our heartfelt gratitude and sincere thanks to all our people who have stood by us through thick and thin; and we are confident that both individually as well as collectively, we will emerge stronger out of this crisis.

Update: IndiGo has indicated to their cockpit crew that they won’t be affected by this round of cutbacks, so ground services, corporate office staff and cabin crew would be asked to go.

Bottomline

IndiGo is currently working overtime to secure its future, and when an airline the scale of IndiGo decides to lay-off employees, the future certainly looks bleak. Unfortunately, about 2,700 employees will be impacted (IndiGo had about 27,000 employees in 2020, and 23,500 employees as of March 2019). As per the 2019 accounts, IndiGo used to spend INR 314 crores (USD 419 Million) per annum on employee compensation and benefits through the year.


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Comments

  1. This is likely to impact the support staff (at corporate offices) mostly. The cabin crew was being let go since March 2020 only. The slight of hand they used to cover up was non-renewal of the cabin crew agreements when the agreements were up for renewal. Hence excluding such separations from being classified as “firings or retrenchments”.

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