Covid-19: IndiGo to lay off 10% of its workforce, says CEO Ronojoy Dutta

Budget airline IndiGo will be laying off 10 per cent of its workforce, which roughly translates into about 2,400 employees, as the aviation industry has been hit hard by the coronavirus pandemic.

"After carefully assessing and reviewing all possible scenarios, it is clear that we will need to bid a painful adieu to 10% of our workforce. It is for the first time in the history of IndiGo that we have undertaken such a painful measure," Ronojoy Dutta, CEO, IndiGo said in a note.

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The laid-off employees will be paid notice pay in lieu of serving notice applicable to them, which will be calculated on the gross salary, based on the employee’s notice period.

In addition, the airline has committed to pay 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.

With its fleet of 262 aircrafts as of March 31, 2020, the airline offered 1,674 daily flights during the quarter and connected 62 domestic destinations and 24 international destinations. However, as Covid-19 gripped the globe, the passenger traffic fell drastically in the April-June quarter. As a result of which, airlines were able to operate only a small fraction of their operations, leading to a severe contraction in the toplines.

As on March 31, 2019, IndiGo had 23,531 employees on its payroll, and a 10 per cent cut would mean that the company would be laying off 2,353 employees.

In May, IndiGo announced pay cut ranging between 5 per cent and 25 per cent, in addition to its leave-without-pay programme for May, June, and July, for senior employees, but this was not sufficient to stop the airline from losing money. "We had to undertake a number of measures such as pay cuts, Leave Without Pay and various other cost saving measures; but unfortunately, these cost savings are clearly not enough to offset the decline in revenues," Dutta said.

Globally, airlines have been laying off employees left, right and centre, as people have been wary of non-essential travel. A recent International Air Transport Association (IATA) financial outlook for the global air transport industry said the airlines are expected to lose $84.3 billion in 2020.