Air India doesn’t have funds to pay employee salaries beyond October

NEW DELHI: Air India won’t have enough money to pay salaries to its employees beyond October amid upcoming debt repayments and plans by the government to sell its 100% stake in the airline, senior officials told ET.

“The government had provided Air India sovereign guarantees amounting to Rs 7,000 crore and the airline has about Rs 2,500 crore left, which the airline will utilise soon,” said one official who did not want to be identified.

Another government official said the Rs 2,500 crore would be used to clear dues of vendors including oil companies and airport operators and to pay salaries for a few months. Air India’s salary outlay is a little over Rs 300 crore per month and the troubled national carrier has been delaying these payments.


“Even May’s salary came over 10 days late,” said a third official on condition of anonymity.

Air India won’t be the first government owned company without funds to pay salaries. Bharat Sanchar Nigam Ltd., the state-owned telco, is also said to be out of cash to pay employees.

“The government is aware about the airline’s financial problems,” said one official.

However, the civil aviation ministry has not sought any additional funding for the airline in the budget to be presented on July 5.

“It’s the same as the demands made in the interim budget and we are not seeking anything extra for Air India,” said a senior ministry official who did not want to be identified.

In the interim budget, Air India Asset Holdings Ltd., a company that holds some of the airline’s debt and assets, was allocated Rs 3,900 crore for the previous and current financial years to service debt. The company had taken on Rs 29,464 crore of Air India’s total debt of Rs 58,000 crore.

Meanwhile, Air India is staring at debt repayments of Rs 9,000 crore in the current financial year. Without the ability to service the loans, it had sought the government’s help. However, it seems unlikely that the government will step in at this stage as it works on a plan to divest its 100% stake in the national carrier.

The airline may find a partial solution to the problem.

“We are working to roll over the repayment of about half of the total debt, which is the working capital debt, to the next financial year. But we cannot do anything about the rest, which is loans against aircraft,” said one official.

The government added that repayment of Rs 4,500 crore can only happen if it provides the money.