Mumbai: State-run National Aviation Co. of India Ltd, or Nacil, which runs Air India, is likely to delay payment of salaries to its employees by at least two weeks because of a cash crunch. Salaries that would have been paid by this month-end will be paid by 15 July, said a spokesperson for Nacil.
The delay would be the first such by Nacil, which has at least 31,500 employees. The move to delay salary payments is expected to exert pressure on the government to bail out the airline.
On the sidelines of the 65th annual general meeting of the International Air Transport Association, or IATA, Nacil chairman and managing director (CMD) Arvind Jadhavsaid his airline was facing a liquidity crisis, as were other domestic carriers.
“We have written a strong letter to (the) Nacil CMD on this decision, that was taken unilaterally,” said George Abraham, general secretary of the Aviation Industry Employees’ Guild. “This is (a) breach of various Acts and agreement reached between (the) management and the unions.”
Cash crunch: Air India chairman and MD Arvind Jadhav. Harikrishna Katragadda / Mint
The employees, who were informed about the likely delay in a circular on Friday, will be badly hit because it coincides with the reopening of schools after summer holidays. Employees with home and car loan payments to make in the first week of July would also be hit, he said. “Nacil used to pay us on the last working day of a month, and this is the first time in the history of Nacil,” Abraham added.
Private carriers such as Kingfisher Airlines Ltdand Jet Airways(India) Ltdhave also delayed salary payments to employees in the wake of the economic slowdown that has caused passenger traffic growth to decline.
“The annual wage bill of Nacil is around Rs4,000 crore on a revenue of Rs15,000 crore. The delay in salary will also put huge amount of pressure on the Union government to give Nacil a much awaited soft loan, grants and equity infusion to stay afloat,” said a senior Nacil executive on the condition of anonymity.
On 10 June, civil aviation minster Praful Patel said the government will infuse equity into Nacil soon. Nacil had asked the government for Rs4,000 crore in equity and debt as working capital and to support the capital expenditure of Rs44,000 crore it will incur in acquiring new aircraft, a process that began in 2005.