Praful warns of possible strike in Air India if wages are recast

The government must be prepared for a possible strike by the employees of the carrier.

Ahead of the crucial Cabinet meet to decide on equity infusion in state-owned Air India,civil aviation minister Praful Patel has cautioned finance minister Pranab Mukherjee that the government must be prepared for a possible strike by the employees of the carrier if wages are rationalised as part of the turnaround plan.

According to government sources,Patel,who met Mukherjee on Monday,also pressed for an additional Rs 3,500 crore succor to help Air India tide over the current crisis. This is in addition to the Rs 1,200 crore equity infusion that the ministry has sought in the Cabinet proposal. Air India would require Rs 3,500 crore to meet interest payment and other obligations. The finance ministry was informed that small doses of cash would not suffice and the airline needs a single big shot of equity infusion, said a source.

But the civil aviation ministrys big worry is that unions may strike work if wages are streamlined. The Cabinet has to set the process rolling for redrawing of wage agreements with unions. There may be some repercussions and the government needs to be aware of that and prepare accordingly, said the source. The airlines previous attempt to slash perks by half backfired when its management-grade non-unionised employees struck work for almost a week.

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The ministrys proposal before the Cabinet requires it to take a call on three crucial issues. First,the remaining bailout installment of Rs 1,200 crore which was linked to the airlines performance. Second,rationalisation of wages and third,operationalisation of strategic business units like ground handling. In February,the Cabinet had released Rs 800 crore,the first installment of the Rs 2,000 crore equity infusion agreed to.

Besides the finance ministry,Home Minister P Chidambaram too had opposed the proposal for equity infusion on the grounds that the airline had failed to deliver on the milestones set by the group of ministers chaired by Mukherjee. The ministry has forwarded the proposal to the cabinet secretary and the Prime Ministers Office,after including the remarks of all concerned.

Air India has accumulated losses to the tune of Rs 7,200 crore and has working capital loans of around Rs 18,000 crore. Its deteriorating financial condition,said sources,has reached to a level where it may not be able to pay salaries to its employees beyond March 2011.

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