Air-India employees can look forward to a 15-20 per cent increase in their salaries in the run up to the airline's forthcoming initial public offer. The airline's current annual wage bill is over Rs 1,000 crore (Rs 10 billion).

Sources in the airline said agreements had been signed already with two leading unions - A-I Employees Guild and A-I Employees Union, which together represent over 8,000 out of the total 15,000 employees. The memorandums of understanding was signed on the basis of Department of Public Enterprises guidelines.

A final decision on the wage hike is expected within few weeks after negotiations are held with the associations of officers, service engineers, cabin crew, technical officers and air hostesses.

The company is trying to sort out the wage hike issue quickly as it is planning to hit the capital market by June 2006. The company's aircraft employee ratio has declined to 1:385 as on December 2005 from 1:450 as on December 2001.

The number of employees has come down substantially to 15,500 for a fleet strength of 42 aircraft this year against 18,500 for 26 aircraft four years back.

This reduction is mainly owing to attrition, voluntary retirement scheme, abolition of post in non-operational cadre, recruitment only in operational cadre and redeployment of staff. The curent wage expenses constitute 15 per cent of the total operating cost.

Meanwhile, DSP Merrill Lynch, the pre-IPO advisor, will submit its report soon. "We are in continuous dialogue with advisor for drafting the business plan and finetuning the time schedule for the IPO, which is likely to hit the market in June," the source said.

Pay on a roll

• Employees can expect 5-20% hike in salaries in the run up to the airline's IPO
• The number of employees has come down substantially to 15,500 for a fleet of 42 aircraft only 26% stake and privatising the rest
• The other route for allocation of captive blocks is through a screening committee