Kingfisher grounded: Will try to clear salaries within 'next few days', says CEO Sanjay Aggarwal

The DGCA told reporters today 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.

Civil Aviation Minister Ajit Singh too said today "Passenger safety cannot be compromised." He added, "If engineers don't give approval before take-off the aircraft cannot fly. So we cannot allow Kingfisher to fly while engineers are on strike."

Kingfisher has defended its safety record and spokesman Prakash Mirpuri today said, "There is no threat to our operating license. Our lockout follows violence by a section of employees. We have more than sufficient pilots and engineers to operate safely. However, they are being prevented from coming to work and hence the action." CEO Sanjay Aggarwal too said a "small group of people were preventing others from coming to work." In an email to employees on Monday, the CEO said the lockout was the result of "unabated incidents of violence, criminal intimidation, assault" by disgruntled employees who have been intimidating their colleagues.

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.

The aviation regulator has said it will ask other airlines not to hike airfare because of the Kingfisher shutdown.

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 day when none of its planes fly.

One Kingfisher account, the DGCA said, has been frozen, but quoted the company's executives as saying that they would start paying salary to employees if other accounts were opened shortly. The regulator pointed out that the airline was also talking to banks to get its debt restructured. CEO Sanjay Aggarwal said after today's meeting that half of Kingfisher's employees have received their salary, though he forfeited his. "I get the last check," he said.

 India announced just last month that it was opening aviation up to foreign direct investment of up to 49% by global airlines. Kingfisher's promoter Vijay Mallya has been a vocal advocate of that move.

The airline's share price plunged 4.8 percent on Monday, bringing its slide for the year so far to 27 percent. 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 7 Airbus planes and 3 ATR aircraft.