NEW DELHI: It is a happy Eid for Air India ’s (AI) flying crew. The airline has paid July’s flying allowance to pilots — which comprises almost 70 per cent of their total pay.

AI is facing a severe cash crunch due to which payment of salaries has been delayed for five months now. “Salary and flying allowance delay has been tormenting us for months and (we) are committed to resolving the issue,” the Indian Commercial Pilots' Association (ICPA, union of erstwhile Indian Airlines’ pilots) said in a letter to its members.

The union had about a week back threatened to stop flying if the flying allowance wasn’t paid. However in wake of the serious natural calamity in Kerala, they had put any industrial action on hold and had offered to do as many relief flights as needed. “Our heart goes out to our fellow brothers and sisters in Kerala who are battling the severe natural calamity of unprecedented flooding. Kerala is reeling under the worst natural calamity it has faced in nearly a century… We as a union would like to extend our cooperation that may help in aid our fellow citizens and extend any cooperation that may help lessen the pain in Kerala,” ICPA general secretary Captain T Praveen Keerthi said in a letter to the PM last Saturday.

Given its financial position, Air India will take a loan to do debt servicing of about Rs 560 crore due early September.

The Centre has agreed to give Rs 980 crore as equity infusion to the airline and also give sovereign guarantee for raising 2,000 crore as loan, said a source. The mix of this equity-cum-debt will give cash-strapped AI about Rs 3,000 crore and be able to meet its immediate requirements. And most importantly avoid a default next month.

AI had sought Rs 2,121 crore equity infusion from the state after the failed divestment bid. The government had recently sought parliament approval for giving Rs 980 crore in the current fiscal. “Further equity infusion this fiscal will need to be approved by Parliament in the winter session,” said a source. After the divestment bid had flopped, the government had revived a guarantee for Rs 1,000-crore loan (which had been revoked by banks earlier). The new guarantee for Rs 2,000 crore is on top of this revived guarantee.

AI was supposed to get Rs 2,500 crore this fiscal as equity but has so far given only Rs 650 crore on the presumption that the Maharaja will get a buyer. The airline has so far received Rs 27,195.2 crore as equity infusion under the turn around plan (TAP) and financial restructuring plan (FRP) approved by UPA-II in 2012. Its debt is over Rs 50,000 crore.

