Promotions and fresh appointments have also been frozen ahead of the stake sale for Air India, the official added.
The airline has around 10,000 permanent employees.
There was no immediate comment from Air India.
Query sent to Civil Aviation Secretary Pradeep Singh Kharola remained unanswered.
The government is looking to complete the Air India
stake sale in the next four to five months.
Air India is currently making a revenue of Rs 15 crore everyday.
Efforts to sell 76 per cent stake in the national carrier failed to take off in 2018. Then transaction adviser EY in its report had cited the government retaining 24 per cent stake and corresponding rights and high debt as reasons for the failure of the disinvesment process.
On July 3, Civil Aviation Minister Hardeep Singh Puri told the Rajya Sabha that the government is committed to the disinvestment of Air India and the plan is to make it more operationally viable before stake sale.
"It (Air India) will be sold when the buyer ultimately gives the cheque and there are certain prerequisites before any sale, those also have to be met. I do expect that to be finished in 4-5 months but nevertheless to provide for that exigency, we have not accounted for Air India sale proceeds (in budgeted disinvestment proceeds).
"We will try to finish it off by Diwali, if not before," Department of Investment and Public Asset Management (DIPAM) Secretary Atanu Chakraborty said on July 7.
In her Budget speech on July 5, Finance Minister Nirmala Sitharaman said that in view of current macro-economic parameters, the government would not only reinitiate the process of strategic disinvestment of Air India, but would offer more central public sector enterprises for strategic participation by the private sector.