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Air India, India’s national carrier, will defer salary payments for its 31,000 employees by two weeks due to a cash crunch born of tepid demand and overcapacity, the company said Monday. “We are in a low-fare regime. The fuel tax is going up. The number of passengers is not that high. There is excess capacity in the market,” Air India spokesman Jitender Bhargava said in an interview Monday. “The situation is not peculiar to Air India. It goes across the board in India and globally.”
Mr. Bhargava said the carrier, which is entirely owned by the government of India, lost about 40 billion rupees ($800 million) in the fiscal year ended March 31 and would pay 3.5 billion rupees ($70 million) worth of June salaries on July 15 instead of July 1. He said passenger volumes have remained steady, but the airline has added a net of 20 new planes to its fleet in the last 18 months, cutting into profitability.
Civil Aviation Minister Praful Patel told the Press Trust of India Sunday that a government bailout for Air India was being considered “very actively.” “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,” he told the news agency.
“Air India is in a state of crisis,” Kapil Kaul, chief executive of South Asia operations for the Center for Asia Pacific Aviation, said in an e-mail. “Delaying salaries — a first for AI — reflects the state of the carrier’s finances. It is continuing to induct new planes while it has no money to pay for the salaries. The state of AI is a national issue and needs urgent attention.”
