Kingfisher talks with staff fail: 10 big developments

The meeting between Kingfisher Airlines' employees and management in Mumbai today ended inconclusively. The management offered to pay salaries for three months, in a staggered manner, over October and November, but the employees refused the offer.

Earlier, in an exclusive interview with NDTV today, Civil Aviation Minister Ajit Singh said it is "unrealistic to expect Kingfisher to fly again". "Kingfisher took its employees for a ride," he said, adding that he "will not comment on the lifestyle of its owner".

The DGCA suspended the licence of Kingfisher on Saturday until further notice for failing to come up with a viable financial revival plan. "The safety concerns are the most important. The DGCA does not, at this moment, think that Kingfisher can improve their financial state; the strike also, at the moment, will not stop. So after keeping all this in mind it suspended the licence," Mr Singh said then.

 For resumption of operations, the airline will now have to approach the DGCA saying it is ready to resume operations. The regulator will then decide if the airline is fully prepared to fly, including preparedness of its staff to operate flights, the airline's capacity to pay for the operations and all safety measures, before giving a go-ahead. The industry regulator had earlier last week rejected Kingfisher's winter schedule and will redistribute its slots.

In a statement issued Saturday after its licence was suspended, the airline said: "We would like to clarify that this is not a cancellation but a temporary suspension which is valid only till such time that we submit a concrete and reliable revival plan to the satisfaction of DGCA. While this order is being examined, we would like to bring to your notice that the actual position has not changed because of this order. We have in any case always maintained that once the issues with the employees are resolved, we will first present our resumption plan to DGCA for review, before resuming operations."

 The regulator had issued a show cause notice on October 5, asking the airline to explain why its flying licence should not be suspended or cancelled for not providing a "safe, efficient and reliable service". It had given the airline 15 days to answer. The airline had, instead, requested for more time to do so along with a personal hearing.

The airline on Friday had said it was extending its partial lockout until Tuesday, October 23 - the third extension since striking employees brought the operations to a halt on October 1. The airline also said that it hopes to resume operations on November 6, and is not accepting any forward booking until then."We had a positive meeting with employee representatives on October 17 and are hopeful of reaching common ground when we meet again next week," according to the statement, quoting Prakash Mirpuri, the vice-president of corporate communications.

The airline's staff has been on strike since September 30 over non-payment of salaries and other dues since March this year. Multiple meetings between staff and management have failed to end the impasse.

Lenders to the airline are not keen on asset sales as a means to recovering their loans. Earlier this month, the lenders agreed to release Rs. 60 crore from an escrow account to keep the airline afloat. After a restructuring of loans to Kingfisher in 2010-11, its lenders had taken charge of cash flows, including funds received through ticket sales.

About 17 banks-led by the State Bank of India-collectively have an exposure of Rs. 7,000 crore to the airline. That apart, the lenders together hold around a 23 per cent stake in the airline since March, after the banks converted their Rs. 6,500 crore of recast debt (after a corporate debt restructuring, or CDR, in November 2010) into equity. Even monetizing the collaterals will not be enough to cover 10 per cent of the outstanding dues, an official at a public sector bank said yesterday.