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PM assures Parliament on Air India salaries

delhi Updated: Aug 03, 2011 21:15 IST

Prime Minister Manmohan Singh on Wednesday admitted that national carrier Air India was facing "serious difficulties", but added that the government would find ways to pay pending dues to its employees.

"That Air India is in serious difficulties is an open secret," Manmohan Singh told the Lok Sabha, intervening during the question hour.

The government was asked what it was doing to pull the national carrier out of the financial crisis and pay its employees their salaries pending since June and performance-linked incentives pending since May.

"Air India doesn't have resources to pay the salaries. But the government will find the ways and means to pay the wages of Air India employees soon," the Prime Minister replied.

Manmohan Singh had to intervene because a reply from minister of state in the Prime Minister's Office V Narayanasamy - who answered because civil aviation minister Vayalar Ravi had a sore throat - did not satisfy the members.

A ruckus followed for a brief period before the Prime Minister rose to assure the house that the government was looking into the problem.

He said a group of ministers was ascertaining what could be done to get Air India back on track.

Currently, the airline expects a fresh equity infusion of Rs 1,200 crore followed by dues of around Rs 530 crore for operating VVIP flights. The airline is laden with a cumulative debt of Rs 40,000 crore it incurred over aircraft acquisition and as short-term loans to maintain its operations.

Yashodhara Raje Scindia of the Bharatiya Janata Party (BJP) said she was told by some Air India employees that many among them had not paid their EMIs for months.

"Mr minister if you take a car loan or housing (loan), will the bank wait for your salary to come?" Scindia said, addressing Ravi.

Air India pilots who fly domestic get Rs 4 lakh every month, of which 80% is performance-linked incentives. Pilots who fly international get a fixed gross salary of Rs 5 lakh.

In mid-July, the group of ministers (GoM) looking into the issue of revival of national carrier deferred any action on Air India's turnaround plan (TAP) and financial restructuring plan (FRP) for a latter date.

"The GoM will meet again to take a final decision on the matter of more equity infusion," civil aviation minister Vayalar Ravi said after the last GoM meeting July 18. The GoM is headed by finance minister Pranab Mukherjee.

According to Ravi, a consensus was reached at the meeting to expedite the equity infusion and to implement the revival plan for the flag carrier.

The date for the next GoM meeting was not disclosed. The cash-strapped carrier is also seeking a total infusion of Rs 17,000 crore, which includes Rs 5,000 crore for this fiscal alone.

Earlier, the government had infused Rs 4,000 crore in the previous two fiscals. The airline was also promised another tranche of Rs.2,000 crore this year in the union budget.

The Prime Minister had requested the ministerial group to quickly come out with its recommendations.

TAP envisages further equity inclusion, conversion of short-term loans into long-term debt and hiving-off the company's maintenance and ground-handling arms.