The Employee Provident Fund is investigating the allegation that ailing Pelangi Airlines, whose staff are reported to be on a 'silent strike', had failed to contribute to the fund since 1998, said an official today.

A source from EPF told malaysiakini that investigation is being carried out by the Shah Alam EPF enforcement team.

The source however could not reveal the progress of the investigation.

The employees' 'silent strike' - where a number flight crews have called in sick - is believed to be the reason behind the cancellation of several Pelangi flights but the management had denied this.

Pelangi staff, met by journalists at Selangor's Sultan Abdul Aziz Airport two weeks ago, complained that the management has delayed the payment of salaries and allowances as well as failing to contribute to the EPF.

One long-time employee, Ahmad Arbi, told malaysiakini that he did not receive his EPF contribution although it was deducted from his salary.

Asked if the employees had lodged a complaint, Ahmad who is an inflight services executive, said many employees had already reported the matter to the EPF but he did not know exactly when the report was lodged.

Ahmad also claimed that several of Pelangi's former employees had brought a lawsuit against the company on the matter.

In a company circular dated Sept 11, Pelangi promised its staff that it will settle part of last month's salaries as well as the allowances and overtime claims for June.

Ahmad said the company has paid as promised and now the "staff will just have to wait until the end of the month to see if the management fulfills its promise of paying the rest of the wages".

Financial woes

Pelangi's general manager for business development, Tengku Mohd Affandi Tengku Abdullah, however, declined to comment when contacted by malaysiakini .

He said that he did not want his statement to affect the situation as the airline has resume its operation as normal.

Recently, Pelangi's management had conceded that the company was facing a financial crisis.

Mohd Affandi explained that the US dollar appreciation (from RM2.50 to RM3.80 per US dollar) and the hike in oil prices have increased the operating cost of the company.

The company has to pay for the aircrafts' maintenance, spare parts and fuel in US dollars, he added.

"Unlike Malaysia Airlines which is backed by the government, private airlines like Pelangi have to find their own solutions," he said.

Injection of funds

Pelangi Airlines, which started operations in 1987, is owned by a number of state government agencies.

Last Saturday, New Straits Times reported that the Terengganu state government, which holds 31 per cent stake in the airline, would inject several millions of ringgit into the airline.

The state government has also hinted that it would not rule out a joint venture, and is negotiating with certain parties to turn around the company.

The airline, which serviced eight destinations in Peninsula Malaysia and Sumatra, Indonesia, has a staff of 200.