Air India [ Images ] chairman & managing director Arvind Jadhav said on Monday that the delay in paying the staff salary was necessary as the airline is fighting for survival.
"This is an hour of crisis. This is a fight for survival. The survival of our own airline," Jadhav said in a message to National Aviation Corporation India Limited employees.
The statement came a day after the state-run carrier asked all executives in the rank of general managers and above to voluntarily forego salary and productivity-linked incentive payable in the month of July 2009.
Jadhav said in his message that the aviation industry is going through turbulent times. Yet, Air India -- unlike many other airlines -- has not retrenched or laid-off of staff till date, he added.
"Air India has only decided to defer salary and PLI for June only by 15 days and requested senior officials to voluntarily forego July salary," Jadhav said.
He added that loans from financial institutions at high interest rates cannot be availed of endlessly to meet working capital requirement.
"The time has come to face the moment of truth in Air India as well," Jadhav said. Like every other airline, Air India has been bleeding due to excess capacity, lower yield, a drop in passenger numbers, an increase in fuel prices and the effects of the global slowdown.
Its losses have almost doubled to over Rs 4,000 crore (Rs 40 billion) in 2008-09 from Rs 2,226 crore (Rs 22.26 billion) in 2007-08 and it does not have the money to foot the Rs 350-crore (Rs 3.5-billion) monthly salary bill of its 31,500 employees.
Air India has already approached the government for infusion of funds. The state-run carrier is reportedly seeking a bailout package of Rs 14,000 crore (Rs 140 billion), including equity, special grants and soft loan from banks at 5 per cent interest.