Monday, June 15, 2009

Would Air India need government bail out package to pay salaries?

For the first time since the losses hit the national carrier Air India, the payment of salaries for the current month of about 30,000 employees will be delayed by a fortnight.

Confirming this, an Air India spokesperson said, "The salaries of June will be paid on July 15 due to the resource crunch that the company is facing."

The payment of productivity-linked incentive (PLI) has also been delayed by 15 days, according to a circular issued by Air India management.

Air India's losses for the last financial year are estimated at around Rs 4,000 crore, up from Rs 2,226 crore in the previous fiscal.

Reports say the national carrier was planning to seek Rs 5,000 crore as additional equity, Rs 7,000 crore as a soft loan payable after five years at a five per cent interest rate, and a grant of Rs 2,000 crore.

However, top Air India officials have denied the figures, but said they are working on similar lines.

Maintaining that the financial crisis was foreseen last year, industry sources said the acute situation could have been avoided had Air India delayed the ongoing deliveries of aircraft, like its competitors Jet Airways and Kingfisher Airlines did.

They said there is no capacity since air traffic had gone down substantially due to the financial meltdown, and so the induction of additional aircraft could have waited.

Air India has placed orders for 111 new planes worth over Rs 45,000 crore and it currently has a paid-up capital of Rs 145 crore and authorized capital of Rs 1,500 crore package would not match Air India's expectations.

Agencies

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