Kingfisher goes bankrupt overnight

| November 11, 2011 | 0 Comments

This isn’t the best of times for the king of good times. Cash-strapped Kingfisher Airlines, which has been cancelling flights across several routes, faces fresh trouble as some companies who have lent aircraft to the loss-making airline plan to take them back, while about 130 staff pilots have quit in the past few weeks. Unable to raise funds from the equity or debt markets and fast running out of cash to pay for fuel supplies, Kingfisher on Thursday continued to cancel flights for the third day.

While country’s No. 2 carrier claimed it was cancelling 50 flights every day till November 19, it operated only 269 flights of its allocated winter schedule of 418 daily flights on Thursday, The Times of India said. Leasing firms like International Lease Finance Corp, Investec Global Aircraft Leasing and GE Commercial Aviation, which have arranged for leases for the carrier with aircraft manufacturer Airbus, are in talks with Kingfisher over taking back the planes, the Economic Times said.The cash-strapped carrier, which has not reported a profit ever since it got listed and has undergone debt restructuring once, had said in September it planned to exit its low-cost business in the next four months and focus on the premium model. In its efforts to focus on the full-service market, Kingfisher said it has started reorganising its aircraft, requiring few of its flights to be out of service for the next few weeks.”No shutdown, only ensuring loss minimisation by a flight rationalisation and enhanced revenue through reconfiguration of aircraft,” chairman Vijay Mallya was quoted by Economic Times as saying.Kingfisher Airlines cancelled over 30 flights for the fourth consecutive day on Thursday severely inconveniencing passengers at airports across the country, even as some cockpit and cabin crew failed to join duty reporting sick.

Over the past four days, the Vijay Mallya-owned airline has cancelled over 120 flights maintaining they were taking some aircraft off their schedule to add business class seats in the planes. Aviation sources said 30-odd pilots and cabin crew have not reported for duty in the past few days on grounds of sickness, but discounted reports that 100 pilots had quit the airline recently. The airline’s flight schedule has also been severely hit with three oil companies — HPCL, IOC and BPCL–stopping granting credit to it for lifting jet fuel and putting it on a cash-and-carry payment mode.Kingfisher is yet to reply to a show-cause notice issued by the Directorate General of Civil Aviation (DGCA) as to why it had not taken the regulator’s prior approval to curtail its flight schedules as required by the Aircraft Rules, 1937, official sources said, adding they were expecting a reply in a couple of days. Under Rule 140(A), an airline has to obtain DGCA’s concurrence before starting a new route or discontinuing a flight at least a week before taking such a step.

Passengers at major airports complained of harrassment and inconvenience saying they had to rebook themselves on other airlines paying a premium of 20-40% at the last moment.With some cockpit and cabin crew members not reporting for duty, the aviation sources said Kingfisher staff were apparently unhappy over delay in payment of their October salary and allowances. Kingfisher has suffered a loss of Rs 1027 crore in 2010-11 and has a debt of over Rs 7057.08 crore.The sources said the airline has grounded eight of its leased turboprop ATR aircraft.

The cash-strapped carrier also has unpaid dues to the operators of airports and other agencies, which have been putting pressure on it.In the notice sent on Wesdnesday, the DGCA has asked Kingfisher to explain what steps it has taken so far to take care of the passengers who were booked on the flights that were cancelled. Last month Kingfisher Airlines (KFA) promoter Vijay Mallya met senior government officials in both the finance and civil aviation ministries to present details about the precarious state of private airlines’ balance sheet, showing how losses will only multiply unless fares are hiked. He had also sought a level playing field, arguing that state-owned Air India enjoys many advantages as it can dig into the government’s coffers to fund its way out of a crisis, an option not available to its private-sector peers. “He has argued for an immediate need to hike fares to prevent a halt in operations,”

Category: Agencies

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