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Rediff News  All News  » Business » Golden handshake to cost JetLite Rs 5 crore

Golden handshake to cost JetLite Rs 5 crore

September 13, 2008 00:58 IST

Value-carrier JetLite, formerly full-service airline Air Sahara, which was bought by Naresh Goyal last year, will offer a voluntary separation scheme to 750 employees who have been with the airline for one year or below, Chief Operating Office Rajiv Gupta confirmed on Friday.

The company will pay around Rs 5 crore for the severance package.

JetLite executives said employees who are being offered the VSS include 400 from airport services, 160 from engineering services, 100 from sales and marketing and the rest from purchase, stores and administration.

The first phase of the restructuring exercise will be followed by further downsizing in departments like HR and the airline's blue-collar employees (numbering about 800).

"There is a possibility of downsizing at least 50 per cent of the employees from these segments," said Gupta.

The compensation package that Jet Airways has worked out will be based on the number of months that an employee has worked with the organisation.

S Chalke, general manager, HR, Jet Airways, explained that the airline will pay a month's salary for employees who have worked for a month, six months' salary to employees who have worked for six months and a year's gross salary for employees who have worked for a year. The last category has at least 450 employees.

Naresh Goyal-promoted full service carrier Jet Airways bought Air Sahara in 2007 for Rs 1,450 crore and renamed it JetLite.

JetLite has 2,300 employees. Jet's move at downsizing JetLite has already raised questions at its Delhi headquarters over whether the the airline will face operational problems caused by a lack of manpower.

"Jet has allowed us to retain only 20 people manning 24 flights in Delhi," said a JetLite executive.

The executive added that the request that 21 of the 117 staffers in Delhi be asked to leave was turned down. "Instead 90-odd have been asked to go, so there is a shortfall and a possibility that Jet might have to recruit employees soon for the airline if operations are to run smoothly," the executive said.

Aviation analysts suggest that Jet's move to cut manpower may be premature. "We are just 15 days away from a promising inbound traffic flow period. There has been a dip in air turbine fuel costs and airlines will soon rethink capacity additions," said Mark Martin, senior aviation advisor, KPMG.

He pointed out that Jet is expanding internationally and will need manpower. "They should have reacted early to work towards the integration of both airlines from the start, just as Kingfisher Airlines has been able to successfully merge Deccan into its fold with a different product offering," Martin added.

Manisha Singhal in Mumbai