Facing a severe cash crunch, Air India has deferred payment of March salary to its employees by a week to April 7, instead of the usual practice of paying it within the month, airline sources said on Friday.

This is the second time in the recent past that the national carrier has had to defer salary payments. In June last year, it had postponed salaries by 15 days due to non-availability of funds.

The cash crunch caused by the ongoing recession facing the aviation industry and other committed payments, including interests on the aircraft delivered, has led to the decision, the sources said.

The NACIL has been incurring losses since its inception with Rs. 2,226 crore loss in 2007-08 and about Rs. 5,500 crore loss in 2008-09.

The cash-strapped carrier already has over Rs. 16,000 crore working capital borrowings on its balance sheet, coupled with around Rs. 7,200 crore expected losses last fiscal.

Its borrowings have risen steeply from Rs. 6,550 crore in November 2007 to Rs. 15,241 crores in June 2009, primarily on account of interest payments on acquisition of aircraft.

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