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Air India to delay salary

New Delhi, June 14: Air India will delay paying salaries to its 31,000 employees by 15 days in July as it struggles with a cash crunch.

The state-run airline, likely to report a loss of Rs 4,300 crore for 2008-09, could also defer buying some of the Boeing 777s it has ordered this year.

“We, like the rest of the aviation industry, are passing through a temporary cash flow imbalance and will be paying June salaries on July 15 instead of the first of the month,” airline director Jitendra Bhargava said.

Salary payments are expected to be on schedule from the month after, officials added.

Airlines in the country are likely to post a combined loss of Rs 9,000-10,000 crore in 2008-09. Air India is India’s biggest airline. Unlike some of the others, it has not cut pay.

An inter-ministry committee has recommended that Air India, which has sought a Rs 4,000-crore bailout from the government, delay its purchases.

The airline inducted 10 Boeing 777s and 12 Boeing 737-800s over the past two years to feed international routes but the economic downturn has meant that many of the planes are flying less than half-full.

This year, Air India was to buy 7 Boeing 777s. In all, the airline had plans to buy 111 new aircraft by 2012. But officials now say it might take at least another four years to complete the fleet expansion, which will cost Rs 44,000 crore.

In this financial year alone, it needs Rs 8,165.44 crore for new aircraft, unless it immediately defers purchases.

“It does not make sense to buy too many new planes now.... Let the market recover,” officials said.

The airline could consider selling or leasing out older aircraft. “The only problem is the market for old aircraft has also crashed,” a source said.

Air India has been seeking Rs 1,231 crore in equity infusion from the government and Rs 2,750 crore in grant or soft loans. While the request for investment is expected to be granted, officials said, that for soft loans is unlikely to be met.

Last year, private airlines, including Kingfisher and Jet, were allowed to pay their fuel dues of over Rs 2,900 crore in six interest-free instalments.

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