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January 19, 1999

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Air-India lowers retirement age to 58; Lufthansa mulls post-divestment tie-up

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National carrier Air-India has decided to restore the retirement age for its employees to 58 years by reverting from the previous age limit of 60 years, it was officially learnt today.

The decision was taken at the airline's board meeting on Monday in Bombay.

The decision is part of the airline's ongoing exercise to cut down its wage bill and other cost-cutting measures to improve the financial health of the company, airline sources said.

According to sources, the decision was also taken in consideration of the demand from employees' unions collectively representing about 95 per cent of the airline employees who had sought restoration of the age limit for retirement to 58 years as the increase in the age limit was affecting their career progression. The union had made representation to the management and the civil aviation ministry.

The reduction in retirement age limit was expected to bring in a saving of approximately Rs 600 million per annum to the airline.

Otherwise, the company had been annually incurring an outgoing of Rs 300 million in paying retirement benefits to about 200-300 employees retiring every year, the sources added.

Disinvestment proposals for Air-India, improving its operational efficiency and fresh measures to better the deteriorating financial conditions of the airline were other issues reported to have figured during the discussions at the board meeting.

In New Delhi, German airliner Lufthansa on Monday said it might be interested in becoming Air-India's strategic partner when the issue of disinvestment of the national carrier is taken up.

''Lufthansa will surely look into equity participation with Air-India once the Indian government comes out with the guidelines and conditions regarding disinvestment,'' the airline's general manager, south Asia, Harald Hahn said.

He also said Lufthansa has set an immediate goal of raising the number of flights out of Delhi, Bombay and Madras from the present 15 to 21. Hopefully, the bilateral talks between India and Germany will be held soon and Lufthansa will be able to have daily flights from these three Indian metropolitan centres.

Hahn said while increasing flights to and from these three main hubs was the immediate priority, Lufthansa would also be looking at other destinations such as Hyderabad and Bangalore if they have the facilities.

He said India was one of the most important markets for Lufthansa since it had 14 per cent of its Asian sales from here, the second largest earning after Japan.

Asked how the airliner was doing, he said its services to India were ''very successful''. It had a 90 per cent seat factor to Madras and 80 per cent plus from Delhi and Bombay. In fact, Lufthansa had increased its seat capacity from Madras by 40 per cent by introducing the Boeing 747-400.

''The market to India is increasing and we want to be a part of it,'' Hahn said.

The German airliner which flies to 450 destinations in 112 countries unveiled its new generation seats in first, business and economy classes. The new high-quality seats are designed by Recaro and Lufthansa is spending 250 million deutsche marks to refurbish the first and business and 80 million marks for the economy class.

UNI

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