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HindustanTimes Sun,28 Dec 2014

Cut payout, or no bailout: govt to Air India

Tushar Srivastava, Hindustan Times  New Delhi, August 28, 2012
First Published: 22:32 IST(28/8/2012) | Last Updated: 01:43 IST(29/8/2012)

The bleeding national carrier Air India is likely to face bailout blues if it does not stop paying performance-linked incentive (PLI) to employees.

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The government-appointed oversight committee monitoring the implementation of AI’s turnaround plan (TAP) has threatened to stop further equity infusion into the ailing carrier if it does not stop PLI to it staff.

For employees like pilots and engineers, PLI constitutes around 70% of the salary. http://www.hindustantimes.com/Images/Popup/2012/8/29-08-12-biz-06.jpg

The government has committed Rs. 30,000 crore of taxpayers’ hard-earned money, to be paid in tranches till 2020, to keep the debt-laden carrier flying.

“Equity infusion is tied to milestones achieved by the airline,” a senior government official said.

“The foremost condition of the TAP, approved by the Cabinet, was freezing of PLI till the airline turns profitable. This hasn’t happened till now.”

The oversight committee, which includes secretary (expenditure), SBI chairman, aviation secretary, AI CMD, had met last week.

“RS Gujral, secretary, expenditure, chaired the meeting,” a source said.

A senior AI official said they were hopeful of convincing the panel to release the next tranche of equity when it meets next.

“The Justice Dharmadhikari Committee that was formed to sort out integration issues in AI had recommended that the company should continue paying PLI,” the official argued.

Aviation ministry officials said the Cabinet’s decision was sacrosanct.

“It was the Cabinet that cleared equity infusion,” said an official.

“It had set certain conditions for release of money and stopping PLI was foremost. Dharmadhikari panel only made recommendations. They are not binding on the government.”


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