India’s leading private carrier Jet Airways will buy rival airline, Air Sahara, for $500 million in a takeover that will create the country’s largest airline, according to a Jet official.
A spokeswoman for Jet, which had a total staff of around 13,000 people, declined to comment on the protest.
Jet, which has said it expects to break even in the full year to March 2010, has struggled to raise money amid turbulent financial market.
A planned $400m rights issue, as well as a stake sale by Naresh Goyal, the company’s founder, have been delayed.
The job losses have hit an industry at the heart of India’s economic modernisation that employs thousands of young men and women in glamorous jobs.
Airlines have asked for the government to bail them out, but the government, already facing a fiscal squeeze, has so far done nothing to help.
Murli Deora, India’s petroleum minister, said it was the wrong time for Jet to be laying off employees, while Oscar Fernandes, the country’s labour and employment minister, called for an urgent report into the situation.
Analysts and activists said the sudden layoffs left the employees, who were mostly on contract or probation, with few options.
“They have been terminated without notice, and they have little by way of legal recourse now,” said Vinod Shetty, a lawyer and consumer activist.
Local media reports said that the Maharashtra Navnirman Sena, a regional political party, was in talks with Jet officials over the proposed reinstatement of employees from Maharashtra state.
Some analyst believe job cuts are necessary, as airlines bloated by recent expansion adjust to the new reality of falling demand.
Kapil Kaul, chief executive in India for the Centre for Asia-Pacific Aviation, defended the job losses.
“When the industry is going through a tough time and the airline is posting losses and has no access to capital, it needs to do everything possible to cut costs,” Kaul said.
The Indian aviation industry, which had grown at an average annual pace of more than 25 per cent in the past few years, is forecast to post combined losses of nearly $2bn in the year to March 2009.
That would be the biggest loss outside the US, the International Air Transport Association has said.