Air India wants an urgent loan worth Rs. 300-400 crore from banks to meet its immediate working capital requirements such as payments of wages and operational expenses. The combined entity has been going through a difficult time in raising capital through loans from the banks.

Sources said that Air India was running out of funds and was seeking immediate capital worth Rs. 2000 crore in the form of equity and Rs. 3000 crore for the purchase of aircraft from the government. They said that the group of ministers were expected to meet in a span of a week to discuss this request.

The most difficult task for the airline is reaching wage cut agreement with employees. The combined entity of Air India and Indian Airlines has employee strength of 32,000 with an annual wage bill of Rs. 800 crore. Only five percent of the total strength accounts for Rs 800 crore which is 25 percent of the total wage bill.

The wages of Pilots and aircraft engineers range between Rs. 25 lakh and Rs. 1.4 crore annually. The airline is negotiating some pay cuts with them. Sources say that the wage reduction has to be proportionate to the wages earned since a junior employee would not be able to survive a huge pay cut.

The management of the airline would have to show a considerable improvement in matters related to wages since in another meeting of group of ministers it was pointed out that Jet airways had an equal staff size, yet its wage bill was one-third of Air India.

The management of Air India is also contemplating cuts in purchase of 111 new planes for Rs 50,000 crore. Four years ago erstwhile Indian airlines had got approval for the purchase of 43 new Airbus Carriers and Air India had planned to buy 24 Boeings.