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Can’t pay arrears: AI

mumbai Updated: Dec 20, 2010 01:56 IST
Soubhik Mitra

Air India has told the Bombay high court that it will not pay arrears amounting to Rs 220 crore to its current and retired employees owing to its financial crisis.

The Maharaja’s financial health is likely to get worse according to an affidavit filed by Air India in the high court on December 8. The affidavit has been submitted in response to a writ petition filed by a group of retired Air India cabin crewmembers claiming pending arrears.

The affidavit filed by Ravi Gulgule, the airline’s deputy finance manager, states that the airline has to pay pending arrears of Rs 146 crore to existing employees and Rs 74 crore to retired staff.

The affidavit states that the airline has not paid any arrears to retired and existing crew since May 2009 because of the financial crisis. “In these circumstances it is not possible for Air India to make payment of arrears to any category of employees including the petitioners or to give any definite commitment or undertaking as to when the payments will be released,” the affidavit states.

The affidavit also lists the national carrier’s expenditure for the month of November, which is peak travel season, was Rs 277 crore from a total revenue of Rs 1,682 crore. The airline’s expenditure is projected to reach Rs 549 crore in the month of March 2011, when passenger revenues are likely to dry to Rs 1,375 crore.

The startling rate at which the airline is losing revenue is likely to affect operations. Already the airline has grounded four aircraft because spare-parts vendors have partially stopped supplies. “There could be flight cancellations at any moment,” said a senior airline official requesting anonymity.

The national carrier is spending around Rs 13 crore daily because oil companies have stopped supplies on credit. On Friday, it spent around Rs 39 crore to stock supplies for the weekend. Airport operators and catering companies have also warned to stop services.

The affidavit also states that the airline’s slump began since 2007. It incurred a loss of Rs 2,226.16 crore in 2007-08. Losses more than doubled to Rs 5,548.26 crore in the subsequent financial year. Until March 2010, the airline was facing losses worth Rs 5,552.44 crore.

Last Thursday, civil aviation minister Praful Patel asked the Centre for additional equity infusion of Rs 2,000 crore after oil companies threatened to stop supplies to the national carrier over huge pending bills. Last year, it got Rs 800 crore and is likely to get another Rs 1,200 crore within a month.