Ahead of its privatisation next year, Air India is preparing a compensation plan to offer voluntary retirement to over a third of its 40,000 employees.

The airlines is currently on a cost-cutting spree and has also put fleet expansion on hold, scrapping its decision to lease eight Boeing 787 wide-body aircraft, according to an official. The proposal was approved by Air India’s board in April but no further steps have been taken in this regard so far.

The official further said that top bureaucrats in the civil aviation ministry and at Air India have been asked to present a report on how a Voluntary Retirement Scheme (VRS) could be offered to some 15,000 of Air India’s 40,000 staff.

Meanwhile, Air India has issued a clarification on the matter and called the reports ‘baseless’.

The cabinet had approved the plan to privatise the state-owned airline last month by selling part of all of the company.

According to an official in Modi’s office, the plan was approved with Prime Minister making it clear that he did not want to provide fresh monetary assistance to any loss-making public sector company.

Founded in 1930s, Air India has been concurring losses since its 2007 merger with then-domestic carrier Indian Airlines.