Cash strapped AI defers payment of incentives

National carrier Air India has deferred by a fortnight payment of productivity-link incentives (PLI) and flying allowance to over 29,000 employees citing cash crunch.

While the salaries will be disbursed on November 1 in view of Diwali festival, PLI and flying allowances would be paid on November 15, according to a staff notice issued by the airline management.

The reason given for the delay in paying the allowances and PLI is primarily cash crunch caused by month-end rollover payments including those for aircraft acquisition. On an average, PLI/Flying allowance comprises almost 50-60 per cent of the employees' pay package, union sources said.

"This is for the sixth time in the last eight months that the company has failed to keep its commitment signed with the Indian Commercial Pilots Association on November 30 last year," they said.

Under the agreement, it was agreed that payment of wage, allowances and PLI will be made and settled as per laid down practices and schedules which were in vogue prior to January 2009, they said.

Airline officials said the major reasons for the delay in paying the allowances and incentives were committed month-end payments to oil companies, aircraft induction, spare parts payments, bank loan rollovers and repayment of loans and interest obligations.

Air India has also written to the Chief labour Commissioner on October 20 about the delay, citing cash-crunch in the National Aviation Company of India Ltd (NACIL), along with these reasons, ostensibly to preempt any industrial action by the employees, the union sources said.

They said the company has hired three external professionals - Chief Operating Officers for Air India and Air India Express and a Chief Training Officer - at a cost of around Rs 5.5 crore ( 55 million) annually, but were having problems paying the employees.