Hit by a cash crunch, national carrier Air India has announced that for the first time in its history, all its employees will receive their salary two weeks late. Employees will get their salaries for June on 15 July instead of the first of the month. A company spokesman on Monday confirmed reports that all the airline's 31,000-plus employees had been told that their pay and incentives would be delayed.
Perhaps prompted by the development, aviation minister Praful Patel promised on Sunday night that the government would provide a bailout package for the troubled airline. However, the amount would be much less than the Rs14,000-15,000 crore sought by National Aviation Co of India Ltd, which has been running Air India since its merger with Indian Airlines. (See: NACIL seeks Rs14,000 crore bailout, but may get much less)
Employees of Air India are ''extremely disappointed'' with the decision to delay salaries, according to Sanjay Lazar, general secretary of All India Cabin Crew Association, which represents about 2,500 workers of the carrier. He said the association would decide on how to protest against the move after a meeting later on Monday.
''Something like this has never happened in the history of Air India,'' Lazar said. ''How are we supposed to pay our monthly home and car loan instalments? Banks are not going to wait for the bailout package to come from the government.''
On the other hand, a senior official of the airline said, ''The industry as a whole is facing challenging times. Air India is not alone. Look at what is happening to the other domestic airlines also. We have already approached the government for help. Hopefully the lifeline should not be too long in coming.''
The airline's losses for the last fiscal are estimated at over Rs4,000 crore, while its monthly wages and incentives bill comes to around Rs350 crore. Moreover, the airline has ordered new aircraft worth Rs44,000 crore from Airbus SAS and Boeing Co.
In the interim budget for 2009-10, the airline had shown a non-plan expenditure of Rs6,500 crore mainly on account of payment for the 27 new aircraft - 21 Airbus A-320s and six Boeing 777s that it will be inducting through May next year.
While the airline blames the dwindling passenger traffic for the crunch, experts agree that the bulk of the problem has been created because the merger with Indian Airlines was badly mishandled. As Kapil Kaul, chief executive officer, India unit of the Centre for Asia Pacific Aviation, put it, ''Air India doesn't have a viable business plan, and it can never be viable with more than 30,000 employees.
''This marriage between the international and domestic state-owned carriers made perfect sense on paper, but has been let down by poor execution,'' Kaul had said in a report last month. Air India needs to reduce workers and must be privatised for a turnaround, he added.
Bailout figure being 'actively' discussed
Asked about a possibe bailout package, aviation minister Patel told NDTV, ''Well, I think it will happen because as the owner of the airline Air India, the government has its responsibility to put in equity, like private airlines where their promoters put in money.''
Asked if the government was looking at a Rs15,000-crore bailout, Patel said, ''No, no, 15,000 crore is not the number. The number is far less than that. I can't give a number ... but I can certainly tell you that it is being looked at very actively.''
Prime Minister Jawaharlal Nehru formed Air India and Indian Airlines in 1953 by taking over private companies. Indian Airlines melded eight small airlines, while Air India grew out of Tata Airlines.