After much public criticism, Kingfisher Airlines tells passengers that cancellation of flights is for reconfiguration of aircraft, not due to financial difficulty
A little late in the day and after its abrupt cancellation of flights over the past three days caused distress and anguish to passengers, Kingfisher had suddenly remembered its key asset – loyal passengers.
In a email shot at 9.29 pm – well after television debates had castigated the airline for leaving passengers in the lurch an email with the subject line “you matter” hit the mailboxes of all of us who are on Kingfisher’s frequent flyer programme. The King of Good Times had finally remembered his “guests”.
Vijay Mallya, who set a trend with his personalised video saying he had instructed his staff to treat all passengers like “guest in his own house” still wasn’t addressing them personally. The email is signed by Anshu Sarin, Vice President, Guest Loyalty and Kingfisher Holidays. This is a departure because Dr Mallya had won passengers hearts and their loyalty by sending out responses to complaints and comments in his own name.
The mailer from Kingfisher says,
On behalf of Kingfisher Airlines, I am grateful to you for your support and patronage of our services. I would like to take this opportunity to update you on recent developments at Kingfisher Airlines vis-a-vis media reports on our performance.
As you are aware, the Indian Aviation Industry has been faced with the difficult task of coping with high costs and lower yields. Post considerable thought and deliberation, Kingfisher Airlines has rolled out initiatives that aim to drive the long-term profitability in our efforts to meet these challenges.
As announced earlier, we have decided to focus on the full-service market; to this end Kingfisher Airlines has initiated reconfiguration of its aircraft. This exercise will require few of our aircraft to be out of service for the next few weeks. Ergo and in line with maximizing productivity we have rationalized our network, resulting in a temporary discontinuation of approximately 50 flights out of our current operating schedule of approximately 350 departures per day. Once the reconfiguration is complete, these aircraft will be pressed back into service immediately. Clearly the report about our flights being cancelled owing to the supposed exodus of pilots appears to be falsified.
Our service commitment to you remains sacrosanct, and we have taken every measure to reduce any inconvenience caused due to the temporary changes in schedule. Please accept my sincere apologies in case you have been inconvenienced on this account; I truly appreciate your support, and thank you for your understanding.
I look forward to your continued patronage and remain,
Guest Loyalty and Kingfisher Holidays
SAT had on 18th October asked the group’s two companies—Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation) and Sahara Housing Investment Corporation—to return the money
New Delhi: The Sahara group today moved the Supreme Court challenging Securities Appellate Tribunal (SAT) order asking the company to refund the money raised through Optionally Fully Convertible Debentures (OFCD) to investors within six weeks, reports PTI.
SAT had on 18th October asked the group’s two companies—Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation) and Sahara Housing Investment Corporation—to return the money.
Sahara, which has challenged the SAT order, has also sought an interim stay on it.
SAT had passed the order on an appeal filed by the group challenging the order of the Securities and Exchange Board of India (SEBI) which had in June asked the two entities to return the money collected from investors through financial instrument OFCD citing violation of regulatory norms.
Besides, the stock market regulator had also restrained the entities from accessing the securities market for raising funds till the time payments are made to the satisfaction of the SEBI.
The two companies and its promoter Subrata Roy Sahara, and the directors—Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary—jointly and severally were told to refund the money collected.
The company had then approached the Supreme Court which asked it to approach the tribunal.
While dismissing the appeal, the SAT had held that the market regulator has jurisdiction over such fund raising schemes.
“...we may mention that in view of our findings that OFCDs issued by the company are securities and that the issue was a public issue requiring mandatory listing and that SEBI has the jurisdiction under the SEBI Act to deal with all kinds of securities and companies, whether listed or not...”, the order had said.
Sahara had contended that SEBI has no jurisdiction over the issue as the companies involved were not listed. It maintained that entities involved were privately-held companies and were under the jurisdiction of the ministry of corporate affairs (MCA).
But the tribunal did not agree with its contention and dismissed the appeal saying “this argument has no merit... A plain reading of regulation... leaves no room for doubt that the regulations apply to all public issues”.
Dr Vijay Mallya is seeking a bailout for the nearly bankrupt-Kingfisher. But he has leveraged the group to the hilt, according to our sources
Even as Dr Vijay Mallya, the promoter of United Breweries (UB) group is looking for a bailout for the debt-ridden Kingfisher Airlines, Moneylife learns that he has leveraged the group to the hilt.
According to reliable sources, Dr Mallya and other promoters of the UB Group have pledged over 90% of their shares in Kingfisher and United Spirits to raise Rs592 crore and Rs3,600 crore respectively from lenders.
Dr Mallya and other promoters hold around 59% stake in Kingfisher Airlines and have pledged 90% shares out of this shareholding to raise Rs592 crore. Similarly, Dr Mallya and other promoters have a 29% stake in United Spirits and have pledged 93% of these shares to raise Rs3,600 crore.
Even in the group’s flagship company United Breweries, the promoters’ have pledged 13% out of their total holdings of 75% to raise Rs1,400 crore. UB Holdings Ltd, another company belonging to Dr Mallya is in the same situation. The promoters have pledged 17% shares out of their 53% shareholding in the company to raise Rs72 crore.
As far as Kingfisher Airlines is concerned, it has already been rescued once after some prodding by Dr Mallya's political friends. However, its large debt remains a huge drag on the airline. "Kingfisher implemented a debt-recast package during the year under review, pursuant to which loans from bankers in excess of Rs1,300 crore and funds from promoters of approximately Rs745 crore were converted into share capital," said Dr Mallya while speaking at the annual general meeting (AGM) of the company.
Following the debt restructuring, State Bank of India (SBI) now owns 6% stake in Kingfisher, while ICICI Bank and IDBI hold 5.5% and 3.8%, respectively. Other banks like Bank of India, Punjab National Bank and UCO Bank hold less than 2% stake in the debt-ridden Airlines.
Lenders, including state-run banks had to convert the debt of Rs1,400 crore into equities at a premium of 60% at Rs64.48 per share to Kingfisher's market price of Rs39.9 a share in April 2011. Considering Kingfisher's closing price of Rs19.85 per share on Friday the lenders already have lost Rs44.63 per share in the company. indeed, it was clear to everybody even when the conversion was done, that this is a black hole. And yet, the politically well-connected owner of the company is seeking government bailout all over again.