Companies & Sectors
Debt-ridden Kingfisher promises to pay staff salaries soon

Kingfisher Airlines CEO Agarwal, while admitting that he himself have not received his salary, said the carrier will clear all pending salaries of its staff in next few days

 
New Delhi: A day after declaring a partial lockout, top officials of beleaguered Kingfisher Airlines on Tuesday met chief of the Directorate General of Civil Aviation (DGCA) and promised to pay salaries of the staff held up for last six months in the next few days, reports PTI.
 
Sanjay Agarwal, chief executive of KFA along with its executive vice president Hitesh Patel met DGCA chief Arun Mishra. Agarwal blamed a small section of employees for the mess, saying it had led to suspension of all operations till 4th October. The airline has stopped sale of tickets till then.
 
Agarwal briefed the DGCA about the financial problems facing the crisis-ridden carrier as well as the next steps being taken to restore normalcy.
 
"We have shared the steps which we are going to take in the next few days with the DGCA. We have explained our position to DGCA," Agarwal told reporters after the meeting.
 
Regarding pending salaries, he said, "we will clear the pending salaries in the next few days. I myself haven't got the salary." 
 
Kingfisher has been saddled with a huge loss of Rs8,000 crore and a debt burden of another over Rs 7,000 crore which it has not serviced since January.
 
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.
 
Over 80 pilots and 270 engineers have been on intermittent strikes over the past few months, saying they had not been paid salaries since March this year.
 
The latest agitation launched by the engineers, supported by pilots, began on Friday.
 
Civil Aviation Minister Ajit Singh today made it clear that the airline would not be allowed to fly if safety was compromised.
 
"We will have to look at what their plans are....we will take a decision after reviewing the situation," he said.
 
Singh had yesterday suggested that since Kingfisher engineers were on strike, the airline could get its aircraft certified for flying by other certified engineers.
 
Following this, the airline, which has a fleet of Airbus aircraft, was understood to have initiated discussions with Air India and IndiGo to utilise their certified engineers to check their fleet. However, no firm agreements have yet been arrived at, airline sources said.
 
The Kingfisher officials informed DGCA that they would resume operations from Friday, sources said, adding that the aviation regulator wanted to be "fully satisfied" with their operational parameters.
 
It asked the airline to "explain their operational preparedness" again when they resume flights as safety was of prime concern, the sources said.
 
Kingfisher is understood to have initiated talks with "a couple of airlines" on putting in investments, sources in the know said, adding that the entire process would take two-three months to fructify.
 
Kingfisher is also understood to have informed DGCA that it has been in talks with the Central Board of Excise and Customs (CBEC) and Central Board of Direct Taxes (CBDT) to de -freeze its bank accounts to enable them pay the salaries.
 
About Rs60 crore were stuck in these accounts, which would go a long way to clear salary and other dues, sources said.
 
The airline officials have also informed the aviation regulator that some Indian banks have offered to help it out, but only after the company finds fresh investors and gets investments.
 
The airline has been operating seven Airbus A-320s and three turbo-prop ATRs to fly about 80 flights daily.
 
In a statement late last night, the Vijay Mallya-owned private carrier said it has been forced to declare a "partial lock-out" following a series of "protracted and unabated incidents of violence, criminal intimidation, assault, wrongful restraint and other illegal acts" by some employees.
 
The airline said, "the action by the recalcitrant employees who have regrettably chosen to take law into their own hands forcing a complete paralysis of operations were all unnecessary and unprovoked."
 
"It has been decided that flight operations will be suspended for the next three days, i.e. until 4th October," it added.
 
The airline also claimed that "a vast majority of the staff are willing to cooperate and support the company in these turbulent times." 
 
The agitators had yesterday met top airline officials but did not get any assurance about salary payments.
 
A representative of the striking engineers who was part of the meeting had said, "we had a long meeting with the CEO (Sanjay Aggarwal) but no solution has come out. Rather he threatened a temporary shutdown saying the company did not have funds to pay salaries even for a month."
 

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COMMENTS

rajeshpai

5 years ago

What bunkum!!Where was violence from staff??Also criminal intimidation.White lies from the well paid PR machinery.

The staff have been regularly and repeatedly assured that their salaries will be paid soon.And that day never comes.What has been the sacrifices that Dr Vijay Mallya has been making while his staff are squeezed for months??He continues to enjoy his champagne and caviar at Monaco alright.He is the King of Good Times you see.Poor chap has to struggle to keep up that image to impress foreign airlines to invest in his Great company.

And the poor staff are suckers for such promises.Anyone who is able to find a job has been leaving.Mind you passenger safety is given a go-by with qualified and experienced people abandoning the ship.

Cannot understand how passengers are still buying tickets to fly with KFA.Height of optimism.
It is time KFA is closed down, which has been a product of bad management and promoters lavish lifestyle.
Let banks insist that Dr Mallya sell his personal shares in UBL or United spirits to infuse capital before banks can even talk to him.

Kingfisher in a monetary net?

It is sad that Kingfisher is reduced to the state it is in today. But there are many alternatives the airline might be working on including the FDI participation by a foreign associate. If and when such a move occurs, banks may relax their attitude and demands

After waiting for seven months, engineers, pilots and other staff members of the Kingfisher Airlines called it a day with “enough is enough” and struck work, leaving stranded passengers inside the aircraft at the Delhi airport, for about twenty minutes!

 

The fact is that Kingfisher Airlines has been having this sort of labour problems for months now; despite not receiving the salaries for several months, a lot of the staff has been responding to the call of duty and has banked on assurances that got them nowhere. Flights were inordinately delayed and many failed to take off. Eventually, flights had to be cancelled resulting in untold miseries to the passengers whose travel plans went astray due these troubles.

 

Though the airline has a large fleet of 64 aircraft, operationally, it had come down to 20 but this liquidity crunch has taken a heavy toll. While accurate figures are not available readily, banks have lent the airline some Rs7,000 crore or so. It would appear that banks have been demanding their overdue loans and are unwilling to extend any further credit.

 

Meanwhile, with the revised attitude of the government towards foreign direct investment (FDI) in aviation, at the moment, there is no sign of a foreign partner being roped in to revive the fortunes of Kingfisher.

 

However, this flamboyant industrialist, Dr Vijay Mallya is perfectly capable of springing surprises and before long such an announcement is expected.

 

There is no doubt in the minds of regular Kingfisher passengers that the airline has provided the very best of services in the past but the present impasse has taken too long to overcome; yet their gut feeling is that this is bound to happen soon.

 

Other domestic airlines have come to the rescue of stranded passengers; Jet Airways, SpiceJet and Indigo are having had a field day so far and have near-full occupancy on their flights, at the expense of Kingfisher.

 

Kingfisher, a member of the UB family has had a brilliant record of passenger service in the past but in the last few months due to the delays and cancellations, their image has taken a beating.

 

Ajit Singh, the civil aviation minister, in response to media enquiries has stated that the DGCA (Director General of Civil Aviation) will not hesitate to close down the airline if is not airworthy as passenger safety is the first priority. Hence, for the next few days when this issue is hotly debated, no flights may take off, and Kingfisher will remain grounded due to absence of staff.

 

What can the beleaguered airline do? There are many alternatives that it might be working on including the FDI participation by a foreign associate; if and when such a move occurs, the banks, who have been sitting on the fence, may also relax their attitude and demands and extend the much-needed credit time and limit; the overdue salaries may be covered by raising the funds by fully convertible debentures with a reasonable interest rates and reworking profitable routes and flights to select destinations, as a start, and aim to achieve a100% occupancy factor. 

 

These may be the rights steps that Dr Mallya may be working on, sitting quietly in a secluded corner in Paris where he is reported to be staying at the moment!

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at anantha_ramdas@yahoo.com.)

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COMMENTS

rajeshpai

5 years ago

Has anyone been trying to find out why the airline has come to this stage.BAD MANAGEMENT.It has been top heavy and bleeding money right through.Dr Yes Dr Mallya wants flamboyant lifestyle and wants to be seen at the race courses, F1 circuits, IPL, Yachts than at offices.People have seen him drunk at IPL matches.
If at any time funds do happen to come to rescue KFA, then strict management initiatives and control are a must.Otherwise the sad story will repeat itself.
Why is there a soft corner for the promoter in the article.He should be in jail actually.Usurping srvice tax and TDS collected from full fare paying passengers for him to have a good time??!!
Can you blame the staff to stop working when they are not paid salaries for months.And during that time, did Dr Mallya starve?
He was having a good time alright and so was his son burning public money to fund their lavish lifestyle.
He was so brazen and banks agreed to pay him a fee for offering his personal guarantee to the company he owns.
He is not worried as banks are in a big soup and they will work out a scheme to save their own skins.
For him and his son the good times continue.

Religare Enterprises gets board nod for IFC's $75 million investment

Religare received approval from its board for $75 million investment by the World Bank unit IFC through preferential allotment

 
New Delhi: Religare Enterprises said it has received approval of the board for World Bank arm International Finance Corp (IFC)'s $75 million (about Rs400 crore) investment in the company, reports PTI.
 
The entity is the holding company of financial services conglomerate Religare Group.
 
In a statement, Religare Enterprises said it has received the company board's approval for $75 million investment by the IFC through preferential allotment.
 
The board approved the investment on 29th September. The transaction is subject to customary documentation and approvals.
 
"This investment by a marquee investor such as IFC at the Religare holding company level is a strong endorsement of the Religare Enterprises business model and its underlying portfolio," Religare Enterprises Group CEO Shachindra Nath said.
 
"We have endeavoured hard over the last few years to create a distinctive and diversified financial services franchise that fundamentally believes in the long term growth potential offered by the Indian market," Nath said.
 
Last week, Religare had said its board would consider the proposal for issue of Compulsory Convertible Debentures on the preferential allotment basis to IFC, a member of the World Bank Group.
 

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