"Air India is in a very challenging financial situation and is taking recourse to several initiatives with a view to ensuring the continuance of its operations," the airline said in the statement.
"The LWP scheme is a win-win situation for both the management as well as employees as it provides flexibility to employees and simultaneously reduces the wage bill for the company," it added.
Under this scheme, the airline said, the management can pass an order requiring the employees to compulsorily go on leave for a period of six months or two years (extendable up to five years).
Employees will be chosen for the compulsory LWP provision taking into consideration suitability, efficiency, competence, quality of performance, health, non-availability and redundancy, it said.
Air India said "the provision has been introduced for use, very sparingly, with a view to ensure that the overall efficiency of the organisation improves".
It said the management will make sure that the scheme is implemented with complete fairness and transparency as per prescribed procedure.
The airline said it had brought out similar LWP schemes earlier in September 1998, June 2009 and August 2009. However, those schemes did not have the provision of the management sending employees on compulsory LWP, it added.
"Several hundred employees have in the past availed of the LWP scheme," the airline noted.
On Thursday, TMC MP Derek O'Brien slammed Air India, saying its LWP scheme violates labour laws and is an "obvious ploy" to protect the top management and sacrifice other workers.
The airline has a debt of around Rs 70,000 crore and the government started the process to sell it to a private entity in January this year. The national carrier's net loss in 2018-19 was around Rs 8,500 crore.
Civil Aviation Minister Hardeep Singh Puri on Thursday said equity infusion of Rs 500-600 crore every year is not sustainable and cost-cutting in Air India is necessary.
He said that even if Air India wants financial assistance from the government, it may not be possible as the Centre has to meet other demands too such as providing relief to vulnerable sections of the society amid the coronavirus pandemic.
The aviation sector has been significantly impacted due to travel restrictions imposed in India and other countries in view of the coronavirus pandemic. All airlines in India have taken cost-cutting measures such as pay cuts, LWP and firings employees in order to conserve cash flow.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.