Employees of the cash-strapped Air India can expect their outstanding salaries by Diwali. The government on Tuesday told the airline to clear all dues by that time.
"Air India has decided to clear payment of salaries to all its employees for the months of September and October 2012 before Diwali," a civil aviation ministry statement said.
"It (Air India) will also make up-to-date payment of PLI (productivity linked incentives) for all licensed category employees for the months of May and June 2012," said the statement.
The national carrier responded by saying that it was making all efforts to clear the dues as its yields and revenues had improved.
The airline had the second largest market share of 19.3 percent of the domestic passenger traffic in September.
The airline will incur an expenditure of Rs230 crore on payment of basic salary and Rs.200 crore for payment of the PLI.
The PLI for the same period for non-licensed category of employees, which includes staffers, will be paid by the end of November 2012. The airline will incur an expenditure of Rs60 crore on this account.
Earlier, the airline had paid July salary to all employees starting from September 27, 2012. The salaries of non-licensed category employees for August were paid by September 29.
In addition, the airline paid the PLI for the licensed category, which includes pilots and crew members, for May.
That time the payments to the employees entailed an overall expenditure of Rs230 crore to the airline.
Recently, Air India reported a cash surplus of Rs48 crore during April-July, reducing the net losses of the airline.
The carrier had a cash deficit of Rs586 crore during the corresponding period in the previous fiscal.
The airline had also reduced expenditure by 4.4 percent in the same period which stood at Rs268 crore from like period of 2011.
The government has also released Rs2,900 crore to the airline under the Rs4,000-crore budgetary allocation for 2012-13.
The airline is soon to issue non-convertible debentures worth around Rs7,000 crore.
The improved performance should come as a relief to the airline which has a debt of about Rs21,200 crore as working capital loans, Rs22,000 crore as long-term loans on fleet acquisition and an accumulated loss of Rs20,320 crore since 2007.