Air India’s chairman Arvind Jadhav has written to staff apologising for a delay in salary payments as the loss-making carrier seeks a financial restructuring.
Up to 40,000 employees were not paid last month, including 33,000 pilots, cabin and ground staff and 7,000 casual employees.
“You are well aware that Air India is passing through a very challenging and critical phase. Increasing debts, mushrooming interest burden and increasing fuel costs are financially crippling the company,” Jadhav wrote in a memo obtained by news agency Reuters.
The airline was forced one day last month to cancel a handful of flights because it had not paid its fuel bills.
Air India and 26 banks are in talks to restructure $4 billion of working capital debt in a deal that would force lenders including the State Bank of India to accept equity in the carrier and cut lending rates to about 8% from 11-13%, saving it $133 million in interest payments.
The carrier’s domestic market share has dropped to fourth from third, behind private sector rivals Jet Airways, Kingfisher Airlines and budget carrier IndiGo. A recent 10-day pilot strike forced it to cancel 90% of domestic flights, costing nearly $56 million.
The airline’s former chief operating officer Gustav Baldauf quit in February less than a year into the job after he gave a newspaper interview in which he was quoted as speaking out against government interference in Air India’s day-to-day operations.
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