Cash-strapped Kingfisher Airlines Ltd is seeing an exodus of people with at least 3,500 employees having resigned in the last one year, also reflected in falling employee costs in the April-June quarter.
The headcount is down to 4,200 from 7,700 a year ago, according to two executives of the Vijay Mallya-promoted airline. Both spoke on condition of anonymity.
“Out of the 4,200, 40% are not working as the airline closed at least 20 airport stations as part of downsizing its operations,” said one of the officials.
A Kingfisher Airlines spokesperson declined to comment.
The management has not paid salaries since February, prompting employees to resort to multiple strikes in August. At least 15 flights were cancelled on Saturday.
The situation is likely to aggravate from Tuesday night as more pilots are expected to join the stir if they are not paid by the end of the banking hours. That the airline is losing employees is reflected in the company’s April-June quarter results where the employee costs for Kingfisher Airlines fell 66% to 58.88 crore, against the R173.66 crore in the corresponding quarter of the previous fiscal. Typically, employee costs represent 10-12% of the total operating cost of an airline. One such employee, 30-year-old Anish Dcosta, an aircraft engineer who decided to quit in May as he was not getting his salary, said: “I have decided to go for further studies.” He, however, did not divulge details of his dues or future plans.
A human resources consultant, requesting anonymity, said the exodus would impact both Kingfisher Airlines as well as the industry at large. “Those with soft skills may find a job in other sectors, including the hospitality sector. But those employees with airline-specific talent (such as pilots) will create a surplus in the domestic job market at a time when the global airline industry is facing turbulence,” he added.
Craig Jenks, president of Airline/Aircraft Projects Inc., a New York-based air transport consulting and advisory services firm, said it is a negative situation, adding, “It is much harder to become profitable by shrinking than by growing.”
Meanwhile, the second Kingfisher Airlines executive cited above was optimistic that employees would return. “Though we failed to retain talent, I do not see a problem. The brand—Kingfisher Airlines—is still strong. Employees would return to the airline once it is ready to fly the full schedule or it gets an investor—be it a domestic institution or an international airline,” he said. “Kingfisher continues to believe it will get recapitalized and get on a path of sustained profitability. The airline is in discussions with several strategic and financial investors to bring fresh capital,” the airline said in a statement while announcing the April-June quarter results, without disclosing the names of the potential investors.
High jet fuel costs and grounded planes led to cash-strapped Kingfisher Airlines’ net loss widening two-and-a-half times to Rs.650.78 crore for the three months ended 30 June against a Rs.263.53 crore net loss in the corresponding quarter a year ago.
Incidentally, the scenario is different for other airlines.
Rival carrier Jet Airways (India) Ltd has reduced over 600 employees from the April-June quarter of the last fiscal to the comparable quarter of this fiscal, but its employee costs have risen.
Jet Aiways incurred Rs.401 crore as employee costs in the April-June quarter, up 11.38% from the corresponding quarter of the previous fiscal.
In an analyst call early this month, K.G. Vishwanath, vice-president, commercial strategy and investor relations, said Jet Airways has 220 high-cost expatriate pilots and intends to reduce the number to 50 by the end of this year.
Another listed airline, SpiceJet Ltd’s employee cost for the April-June quarter stood at Rs.131.35 crore—an increase of 71% (Rs.76.93 crore) from the year-ago period.
Kingfisher Airlines lost 1.71% to Rs.9.78 on Friday on BSE while the benchmark Sensex index rose 0.19% to 17,691.08 points.
