Beleaguered national carrier
Air India (AI) has run into more rough weather as its earnings are expected to come down in the lean monsoon season, which has already set in, coupled with bankers shying off from extending more funds to the airline which continues to default on its payments. The airline has even been unable to pay the salaries to its 31,000-odd employees.
Generally, airlines report
revenue losses of 20-30 per cent during the monsoon season, which runs from June-end to September in India, during which time lesser number of travellers take to the air.
Air India's employees have not been paid performance linked incentives (PLI) since March this year. PLI accounts for over 40 per cent of their salaries. This move has resulted in unrest and distrust amongst the carrier's employees. The airline's employees were paid May salaries without PLI as late as this Wednesday.
NO LET-UP IN TURBULENCE
- Debt-ridden Air India (AI) has run into more rough weather as its earnings are expected to come down in the lean monsoon season
- The airline's staff were paid May salaries without performance linked incentives (PLI) as late as this Wednesday
- AI employees have not been paid PLI, which accounts for over 40 per cent of their salaries, since March this year
- This has created further unrest and distrust amongst the carrier's employees
- The AI management however, pleads helplessness saying it is unable to pay the PLI as it is facing a severe financial crisis with daily operational losses running to over Rs 20 crore
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The state-run airline's management pleads helplessness saying it is unable to pay the PLI to its employees as it is facing severe financial crisis with daily operational losses running to over Rs 20 crore. Non-payment of salaries and incentives on earlier occasions has seen the airline's employees striking work.
Fed up with the situation, Air India's pilots are exploring jobs in other airlines, including foreign airlines while some have already quit. According to the civil aviation minister Vayalar Ravi, 1,600 Air India pilots draw a total of about Rs 800 crore in salary in a year and another Rs 800 crore is paid to its remaining 28,000 employees.
Read how Air India accumulated its debt At least 10 associations and unions of the beleaguered carrier have individually written to the minister and sought an immediate appointment with him to discuss issues such as non-payment of salaries and the airline's turnaround plan. However, the minister has not met the employees.
The airline's employee unions have threatened to strike work across the country if issues concerning non-payment of salary and the turnaround plan are not addressed properly. The airline has asked for another tranche of Rs 2,000 crore as equity in the current financial year to repay its massive debt.
Its current long-term debt taken for aircraft acquisition stands at Rs 22,500 crore and its working capital loan is around Rs 17,000 crore.
However, the government is unlikely to infuse further equity as the airline management has not been able to explain its position on the turnaround plan for 2010-14 that envisages revenue enhancement and expenditure reduction in phases.
AI's turnaround plan, including restructuring of its massive debt is expected to come up before a group of ministers (GoM) for approval early next month. According to the aviation minister the turnaround plan has been approved by the bankers. But the civil aviation ministry is sceptical about banks approving funds for AI. Besides this the airline has been defaulting on payment of fuel bills owing to which it has cut flights on some domestic and international routes adding to its losses. This has only worsened its chances of revival.
The airline's turnaround plan that was put in place in August last year, which called for cut in costs by Rs 1,500 crore and increasing revenues by Rs 1,200 crore by the end of 2012, has largely missed the target. Till now, the government has injected Rs 1,200 crore and Rs 800 crore in two tranches in 2009-10, raising the national carrier's equity base to Rs 2,145 crore. The carrier anticipates major losses in 2010-11. Air India recorded a loss of Rs 7,200 in 2009-10, Rs 5,548 crore in 2008-09 and Rs 2,226.16 crore in 2007-08.
Courtesy: Mail Today
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