Kingfisher Airlines' partial lockout was to have ended today, but that seems unlikely. About 10 employees turned up to meet CEO Sanjay Aggarwal in Delhi today, despite him sending an email last evening to set up meetings in major centres through the day; almost all of the 270 engineers on strike since Sunday boycotted the meeting. A senior executive has been quoted by Reuters as saying that the airline expects to resume operations in "four or five days."
Here are the latest developments:
Sanjay Bahadur, vice president of corporate affairs, said that around 100 pilots and engineers in Delhi have agreed to return to work. He also said the airline expects to pay salaries for March within a week, according to Reuters.
The Civil Aviation Minister today said that the government needs concrete plans on how the airline will operate, maintain schedule and if its aircraft are safe to fly. "The ball is now in Kingfisher's court," he said. "DGCA's job is to ensure that Kingfisher has followed all safety parameters before it flies... it should satisfy DGCA that it will maintain its schedule," Mr Singh said.
The debt-ridden airline's lenders have expressed hope that the management will not let the airline go belly up. They say that banks would be a bigger casualty if it were to go bust, according to an agency report.
An official at a public sector bank has said that by monetising the collaterals, the lenders will not be able to recover even 10 per cent of their outstanding loans to the airline. When asked about the amount that banks are looking at as fresh capital infusion by the airline for a fresh lifeline, he said normally a corporate debt restructuring (CDR) involves the promoters bringing in at least 25-30 per cent of the overall CDR package in fresh equity. At 25 per cent, this works out to be around Rs. 1,750 crore as the airline's outstanding principal alone is over Rs. 7,000 crore.
The DGCA had told reporters yesterday that before it can begin operations again, Kingfisher Airlines has been asked to show the regulator its operational plan and prove that it is in shape to fly. The DGCA said it was ready to talk to Kingfisher employees if they were not satisfied with the management's plan. Safety is crucial, it said.
The airline is talking to Airworks for getting its aircraft checked for certification. "Kingfisher Airlines is in talks with Air India, IndiGo and Jet Airways to get its aircraft certified by their engineers for flying," an airline source said on Monday evening. But there is no word on where they will get the funds to pay them.
According to the DGCA, Kingfisher has 10 operational aircraft right now, severely curtailed from the 64 it used to fly. Under government rules, an airline needs to operate at least five planes in order to maintain its licence. Kingfisher, which has 4000 employees, has paid 2000 of them till March this year, the DGCA has said. It incurs a daily loss of Rs. 8 crore if it is flying and Rs. 4 crore on days when none of its planes fly.
India announced just last month that it was opening aviation up to foreign direct investment of up to 49 per cent by global airlines. Kingfisher's promoter Vijay Mallya has been a vocal advocate of that move.
The airline's share price plunged 4.8 per cent on Monday, bringing its slide for the year so far to 27 per cent. It has seen several strikes this year by different sections of employees asking that they be paid salaries. It posted a loss of Rs. 650 crore ($124.0 million) in the quarter ending June. Its total debt as of March 2012 was Rs. 8730 crore ($1.7 billion), according to FactSet, a financial information provider. The airline is saddled with bank loans of more than Rs. 7,000 crore from 17 banks, which it has not serviced since January. State Bank of India has the maximum exposure to the airline at Rs. 1,400 crore. Several of its aircraft have been either taken away by its lessors or grounded by the Airports Authority of India for non-payment of dues during the past few months.
The carrier, which has never turned a profit, has seen its domestic market share fall from second place last year to last among India's six main carriers. At its peak it operated 300 flights a day and had a fleet of 64 aircraft. It currently operates about 50 flights a day with a fleet of seven Airbus planes and three ATR aircraft.
(With inputs from agencies)
