Not AIR India, but PRIVATE Airlines are All Set to be BAILED OUT! Airlines crisis: Jet Airways suffers loss; Kingfisher into debt turbulence,Kingfisher Airlines urgently needs Rs 2,000 crore to survive!Independent body to be set-up to deal with aviation safety!
EPF dues have priority over secured creditors' debt: SC
Indian Holocaust My Father`s Life and
Time - SEVEN HUNDRED FIFTY NINEPalash Biswas
11 NOV, 2011, 08.05AM IST, DHANANJAY MAHAPATRA,TNN
EPF dues have priority over secured creditors' debt: SC
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NEW DELHI: In a landmark judgment, the Supreme Court has ruled that from now on, recovery ofemployees' provident fund (EPF) dues from a company under liquidation would get priority over repaying loans to secured creditors.
A bench of Justices G S Singhvi and H L Dattu said though Parliament, while inserting Section 529A in the Companies Act in 1985, did not declare workmen's dues as first charge, given the provisions of EPF Act, it could not be interpreted that secured creditors would get priority over provident fund obligations of the employer.
However, the apex court bench clarified that other dues of employees cannot get precedence over debt of secured creditors once the employees' provident fund commitments are met.
Country's largest private air carrier Jet Airways today posted a net loss of Rs 713.60 crore for the second quarter of 2011-12, due to high prices of aviation turbine fuel and a depreciating rupee. The airline had a net profit of Rs 12.40 crore in the corresponding period of the 2010-11 fiscal. On the other hand,Tycoon Vijay Mallya's cash-strapped and bleeding private carrier Kingfisher Airlines urgently requires about $400 million (Rs 2,000 crore) to survive and keep flying, an aviation expert said late Friday. Not AIR India, but PRIVATE Airlines are All Set to be BAILED OUT!Civil aviation minister Vayalar Ravi on Friday said he would talk to Finance Minister Pranab Mukherjee to get financially-troubled Kingfisher Airlinesassistance from banks. The minister is also talking to state governments to reduce sales tax on aviation fuel, Ravi told TV channel Times Now.
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NDTV - 1 hour ago
New Delhi: Is Kingfisher, the country's second-largest private airline, going the Air India way? Cash-strapped Kingfisher airlines that has been in the news for numerous flight cancellations in the past few days, has now approached the government for ...
India's aviation regulator on Friday said it was starting financial surveillance of all airlines as it doesn't want them to compromise on safety because of a cash crunch, Director general civil aviation E.K. Bharat Bhushan told Reuters. He said Kingfisher, Spicejet and IndiGo have been asked to explain the reason for operating less flights than scheduled.
Thus come into existence Indian Airlines Corp and Air India Ltd to operate domestic and international long haul services. The nationalisation was also expected to spur growth, promote economic activity, rush assistance in times of natural calamities like flood, famine and earthquake, foster national integration and, above all, serve as the second line of defence in the event of war with another country.
It must be conceded that the nationalised airlines fulfilled most of the expectations of the nation, particularly at times of natural calamities and during the wars with China and Pakistan. This apart, bringing remote places of the country into the mainstream by connecting them with air service need not be told.
Now six decades down the line the government, it appears, has decided to do an about-turn and gift the fully-developed industry with huge infrastructure, assets worth thousands of crores of rupees along with a worldwide network and trained manpower back to private hands.
The crisis in the national carrieris a carefully crafted design to make a mess in the airline, malign it and hand it over to the private hands on a platter. The immediate cause of the trouble can be traced to the senseless merger of the two wings of the airline -- the erstwhile Indian Airlines and Air India.
It is not that the country does not have the experience of airline merger business. The Indian Airlines Corp had its initial teething problems, but then the merger plan was so meticulously worked out that all issues of integration got sorted out in a couple of years and the new-born airline took to wings smoothly.
Of course, behind this success was the government's firm hand and clear stand.
The present amalgamation of the two wings of the national airline was done hastily and defied the recommendations of several committees. Earlier, since the managements opposed outright merger, these committees suggested the creation of a holding company to oversee the functioning of the two airlines and bring about synergy.
Opposed to that, the present exercise was an outright merger, that too without working out any solution for the possible problems to be encountered. Otherwise how come not an inch has moved forward during last over four years on the vital issue of integrating human resources and flight operations?
Pilots of erstwhile Indian Airlines are angry for not getting the same pay as their colleagues of Air-India for doing identical job and working in the same organization. Some top officials, including the expatriate chief operating officer Gustav Baldauf, have quit because of that.
If this was not enough, over the years a large number of profit making routes developed and operated by the national airline have been gifted away, as alleged by the pilots' associations and reports, which have not been denied yet. It appears the very purpose of the merger of the two wings of the national airline has been to create problems, disgrace it and make the demagogues speak against it.
Once a negative image of the company has been created, it will then become easier to hand it over to private hands. This is how the Delhi and were gifted away. From the ongoing crisis in the flag carrier, the sole beneficiaries have been the private airlines -- neither the pilots nor the management, nor, for that matter, the public. This is nothing but robbing the nation's wealth.
In order to ensure better regulation over aviation safety and security, an independent Civil Aviation Authority is on the anvil with the Civil Aviation Ministry finalising a draft legislation on the issue.
Once the draft is finalised, it would be circulated to other ministries for their inputs before it is placed before the Union Cabinet for approval. However, this process would take some time, official sources said.
The proposed CAA would have financial and administrative autonomy to take expeditious decisions on matters relating to a range of activities - from regulation of air traffic services and licensing to ensure financial fitness of airlines, they said.
India's civil aviation minister Vayalar Ravi on Friday said he would talk to Finance MinisterPranab Mukherjee to get financially-troubledKingfisher Airlines assistance from banks.
The minister is also talking to state governments to reduce sales tax on aviation fuel, Ravi told TV channel Times Now.
Shares of the cash-strapped carrier slumped 18 percent to a life low on Friday as the airline continued to cancel flights and newspapers reported leasing companies were planning to take planes back and pilots were leaving.
Kingfisher Airlines is still a viable business and there is no dispute over its survival, its Chief Executive said on Friday, in an effort to dismiss widespread speculation that the cash-strapped airline was staring at bankruptcy.
Unable to raise funds from the equity or debt markets and fast running out of cash to pay for fuel supplies, Kingfisher, India's second largest carrier by market share, has cancelled several flights daily since Sunday in an effort to cut capacity and minimise costs.
"As a matter of fact, UB. group has continued to support us all along over the course of the year, so there is no question about the future or the viability of the airline," CEO Sanjay Aggarwal told a news channel.
Aggarwal said a hundred pilots have quit over the past months. "In any airline there is attrition going on. Over the last several months 100 pilots have quit, its not phenomenon that happened in last two weeks or last 30 days," Aggarwal added.
The ET newspaper reported on Friday that cash-strapped Kingfisher faces fresh trouble as some companies who have lent aircraft to the loss-making airline plans to take them back, while another news report said about 130 staff pilots have quit in the past few weeks..
Kingfisher owned by liquor baron Vijay Mallya, and controlled by the UB Group, had in September announced it was shutting its low cost business to focus on the premium model. .
Kingfisher shares fell more than 17 percent in early trade and was down 14 percent at 18.7 rupees at 10:29 am (0459 GMT).
Facing serious financial turbulence,Kingfisher Airlines has sought government help for a bailout even as it continued its flight curtailment spree for the fifth consecutive day on Friday and its stocks plummeted by over 19 per cent to an all-time low but recovered slightly later.
The seriousness of the crisis was underlined by the urgent request Kingfisher owner Vijay Mallya made to Finance Minister Pranab Mukherjee and Civil Aviation Minister Vayalar Ravi to help Kingfisher in infusion of funds through banks at low interest rates, besides other concessions in line with what Air India was getting, sources said.
However, there was no official word immediately on whether any step was being taken on Mallya's request made earlier this week. Some 50 pilots and cabin crew did not turn up for duty by reporting sick as over 40 flights were cancelled across its network today.
Innumerable passengers across the country cancelled Kingfisher flight tickets to travel by other airlines, though after paying 20-40 per cent higher at the last moment.
The airline, which had earlier said it would restore its flights after October 19, has now indicated that it would take a few more weeks to normalise the flight schedule, that would go into the peak winter season air traffic.
Apart from taking aircraft off flights to reconfigure and install business class seats in them, airline CEO Sanjay Agarwal told PTI, "We decided to reduce frequency in some of the routes where we had multiple flights like Delhi-Mumbai or low passenger load like Nanded-Mysore."
This exercise was part of route rationalisation to improve profitability and revenue productivity of the flights, he said.
Asked whether they had responded to the show-cause notice issued by the Directorate General of Civil Aviation (DGCA), Agarwal said, "We are in close touch with them. We are explaining to them that these cancellations are temporary in nature. We are keeping them informed."
DGCA has issued the notice under Rule 140(A) of the Aircraft Rules, 1937, asking Kingfisher why it had not taken the regulator's prior approval to curtail its flight schedules as required by this rule. It has also sought to know whether the airline had taken any step to facilitate the passengers inconvenienced by the cancellations.
Meanwhile, all the oil PSUs, HPCL, IOC and BPCL, have denied extending credit line to the liquor baron Mallya-owned airline and asked it to pay for lifting jet fuel on a daily basis. The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7057.08 crore.
The CAA would come up at a time when the total number of planes in the country is about 440 and is estimated to cross 1,000 in a few years. In addition, there are over 200 helicopters and private jets.
The passenger handling capacity of Indian airports, which was just 66 million in 2005, has reached 225 million now and is expected to cross 500 million in the next 10 years.
In this backdrop, the CAA would take over the responsibilities of the Directorate General of Civil Aviation like air safety, airspace regulation, setting aviation standards, licensing of airlines, pilots, air traffic controllers and consumer protection.
The Ministry is also proposing to provide certain economic regulatory functions to the new authority, including airfares and areas like consumer protection, environmental research and consultancy.
The CAA is also likely to decide on ground handling and other charges which airlines have to pay to airport operators. It is likely to act as an ombudsman to deal with complaints against airlines, airports and other agencies.
With its proposed autonomy, CAA would be able to recruit professionals directly for a variety of jobs, instead of routing it through the UPSC as it does now, they said, adding that about 400 technical positions in DGCA were lying vacant now.
The CAA would also conduct periodic safety and security audits, including flight inspections of agencies, to ensure that the prescribed local and global standards are being met.
The authority would have powers to take preventive, corrective and punitive action against agencies and staff for violation of rules and regulations and to ensure ethical trade practices, the sources said.
While preparing the draft legislation, the Ministry studied the aviation regulatory systems in many countries and decided to follow the British Civil Aviation Authority model.
Shares of the cash-strapped carrier slumped 18 percent to a life low on Friday as the airline continued to cancel flights and newspapers reported leasing companies were planning to take planes back and pilots were leaving.
Shares of Kingfisher Airlines touched an all-time low before settling sharply down by over 9 per cent as the cash-strapped company continued to face serious financial turbulence.
Kingfisher shares settled at Rs 19.65, down 9.45 per cent from the previous close on the BSE. During the day, the scrip plummeted 19.12 per cent to a lifetime low of Rs 17.55.
On the NSE, the stock closed at Rs 19.85, down 8.53 per cent from the last close.
In the process, the company's market capitalisation (m-cap) eroded by Rs 102 crore to Rs 978 crore from Rs 1,080 crore as on Wednesday.
Kingfisher Airlines has sought government help for a bailout even as it continued its flight curtailment exercise for the fifth consecutive day today.
Some 50 pilots and cabin crew did not turn up for duty by reporting sick as over 40 flights were cancelled across its network today.
DGCA has issued a notice under Rule 140(A) of the Aircraft Rules, 1937, asking Kingfisher why it had not taken the regulator's prior approval to curtail its flight schedules as required by this rule. It has also sought to know whether the airline had taken any step to facilitate the passengers inconvenienced by the cancellations.
Meanwhile, all the oil PSUs -- HPCL, IOC and BPCL -- have denied extending credit line to the liquor baron Mallya-owned airline and asked it to pay for lifting jet fuel on a daily basis.
The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7,057.08 crore.
Meanwhile, shares of Vijay Mallya-led UB Group companies such as United Breweries (Holdings) and United Breweries, too, saw selling pressure and closed with a loss of 9.68 per cent and 2.03 per cent, respectively on the BSE.
ndia's principal opposition, theBharatiya Janata Party, is opposed to any move by the government to bail out debt-ridden Kingfisher Airlines
that cancelled flights to minimise losses and urgently needs cash to escape a collapse.
"If Kingfisher is not in a position to run on a financially viable basis then it should find its own way ... There is no case for a government bailout," Yashwant Sinha, a senior BJP leader and former finance minister, told TV channels on Friday.
Earlier in the day, civil aviation minister Vayalar Ravi had said he would talk to Finance Minister Pranab Mukherjee to get Kingfisher assistance from banks.
Ravi said he had advised Mallya to speak with the finance minister as the airline was not able to get its debt recast. Kingfishers has a debt of 60 billion rupees including a large chunk from state-controlled banks.
In April, state-run lenders State Bank of India, private lender ICICI Bank and a few other lenders converted about 12 billion rupees of loans into equity in Kingfisher as part of a debt recast.
Shares of the cash-strapped carrier slumped to a life low on Friday as the airline continued to cancel flights and newspapers reported leasing companies were planning to take planes back and pilots were leaving.
The shares closed down 9.45 percent lower at 19.65 rupees.
"The quarter's results have been adversely impacted due to high ATF prices and a steep decline in the value of rupee against the US Dollar. The airlines have been progressively increasing the fare to pass on the rising input cost including the cost of ATF," Jet Airways said in a filing to the BSE.
Total income of the company during the period increased to Rs 3,293.54 crore, from Rs 3,067.62 crore in the comparable period, it said.
Further, during the half-year ended September 30, 2011, the airline reported a net loss of Rs 836.76 crore against a net profit of Rs 15.92 crore in the year-ago period.
The civil aviation minister sought to cool a crisis over debt-hobbled Kingfisher Airlines on Friday as investors bailed out, alarmed by scores of flight cancellations and reports that its leasing firms wanted their planes back.
Named after the country's most-famous beer, Kingfisher has climbed to become India's No. 2 private carrier since it began operations in the heady days of 2005 as the economy was booming and forecasts for passenger growth reached for the skies.
But it has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in a long punt on the future.
The Centre for Asia Pacific Aviation (CAPA) has forecast a record $2.5-$3 billion loss for Indian airlines for the year ending March 2012, with state-run Air India alone likely to account for more than half of it.
As shares in Kingfisher slumped 18 percent on Friday to their lowest level since it was launched by the flamboyant liquor baron Vijay Mallya, Civil Aviation Minister Vayalar Ravi said he would approach the finance minister to seek emergency bank assistance for the cash-strapped company.
Shares in India's top two lenders, State Bank of India and ICICI Bank, which each hold more than 5 percent of Kingfisher, fell sharply on concern that their loans would turn sour.
The country's main opposition party, the Bharatiya Janata Party (BJP) made it clear on Friday that it would oppose a state bailout for Kingfisher, which means the pressure will remain on Mallya's United Breweries(Holdings) to keep the airline in business.
"I think it will be difficult for the UB Group to bail them out again and again," said an aviation analyst at a domestic brokerage, who asked not to be named.
"The airline needs fresh funds and there will be a question mark on its survival if it is unable to raise the funds."
Group firm United Breweries has pledged its shares with lenders including ICICI Bank as collateral against loans.
"If Kingfisher has to survive, it urgently requires capital infusion of $400 million, including $200 million immediately to maintain its daily operations," Centre for Asia-Pacific Aviation (CAPA) chief executive Kapil Kaul said.
Noting that the financial health of Kingfisher was critical, Kaul said the country's leading private airline had to operate a manageable fleet from cash flow perspective and rationalise its routes to match with demand.
"The airline has no choice but exit from loss-making routes and operate a fleet that is manageable from a cash flow point of view," Kaul said from New Delhi.
The two-decade-old CAPA provides independent aviation market intelligence, analysis and data services.
Expressing concern over the sudden turn of events for the debt-ridden airline, Kaul said Kingfisher had to find ways and means to reduce non-bank dues at least by Rs.2,000 crore to overcome the financial crisis it was facing.
"According to our estimates, Kingfisher will require about $800 million (Rs.4,000 crore) to fully fund its business plan over next two years. Funds can be raised through rights issue (as planned), GDR (global depository receipts), QIPs (qualified institutional placement) or converting finance leases into sale lease back and leverage future aircraft orders," Kaul said in an e-mail.
Advocating substantial contribution and commitment by the promoter group (United Breweries Holdings & Kingfisher Finvest India), the aviation expert said the airline had to bring in serious management to initiate a genuine recover plan.
"The key issue is to ensure sustainable viability. We have a largely loss-making aviation industry due to the very fragile financial status of the domestic airline industry in which Kingfisher is no exception," Kaul pointed out.
The Indian private carriers reported a combined cumulative loss of $6 billion (Rs.30,000 crore) till March 2011.
"The domestic carriers are projected to report a combined loss of $2.5 billion (Rs.1,250 crore) by end of this fiscal (2011-12), with the state-run Air India alone accounting for $1.75-2 billion) and other airlines to the tune of $600-700 million," Kaul noted.
Making the Gurgaon-based private carrier IndiGo exception to losses as it is expected to be profitable this fiscal (FY 2012) too, Kaul said the low-cost airline continued to deliver a robust performance in extremely challenging circumstances.
Referring to the restructured debt of Kingfisher (Rs.6,007 crore/$1.2 billion), the analyst said the cumulative debt burden of the three big Indian carriers, including Air India (AI) and Jet Airways was a whopping $16 billion (Rs.80,000 crore).
"Indian banks have an exposure of $6 billion (Rs.30,000 crore) related to working capital and term loans. They will have an additional exposure ($2 billion) on the aircraft related financing," Kaul observed.
As of date, Indian carriers, including Air India will immediately require $2.5 billion to fund their operations and stay afloat.
"The operating environment is very challenging. Fuel costs are high, rupee has depreciated by over 10 percent and AI continues to work with loss leadership pricing. I expect this to continue in the near-term," Kaul asserted.
Though the domestic aviation sector will grow 17-18 percent this fiscal, most of the growth will come from cost minus pricing by the airlines.
"We have a serious issue on hand and that is to address the viability of these carriers. Unfortunately, there is no direction in this regard. Government response to the financial crisis continues to be ad hoc and weak. We don't have strategic aviation thinking at present," Kaul added.
Railway minister hints at fare hike
Trivedi told mediapersons here that the issue of fare hike was complex and needs public debate as 91 per cent of passengers belong to the general class.
"I am concerned about railways' financial condition. We cannot take the burden of fuel cost anymore," he said.
According to railway officials, the fuel cost component of a railway ticket amounts to about 30 per cent.
Tatkal reservation period reduced to 24 hrs
Plagued by increasing number of complaints in Tatkal booking scheme, the Railways today decided to reduce the advance reservation period of the scheme from two days to one day as part of measure to prevent misuse of the facility.
Besides, the restriction for agents will be extended from one hour to two hours (8 am to 10 am) and there will be no refund on confirmed Tatkal tickets subject to the exceptions such as cancellation of trains and late running trains.
"It was necessary to make changes in Tatkal scheme as there were many complaints against Tatkal bookings. We had to take some steps to prevent its misuse. All these changes will be effective within a week," Railway Minister Dinesh Trivedi told reporters here.
Tatkal tickets shall be sold only on production of the identity proof and there shall be only four passengers per PNR for Tatkal tickets.
Trivedi said Tatkal reservation period was reduced from 48 hours to 24 hours to prevent its misuse by unscrupulous elements who resort to speculative booking.
According to the changed system, no duplicate Tatkal tickets shall be issued now and it would be done only in exceptional cases on payment of full fare including Tatkal charges.
"We are also planning to introduce a whistle-blower scheme to catch hold of touts who are indulging in misusing of reservation facilities. We are also installing CCTV in the booking area to keep a vigil at the counters," Trivedi said.
DGCA asks Kingfisher to submit fresh Action PlanSHISHIR SINHA
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NEW DELHI, NOV. 11:
The Directorate General of Civil Aviation (DGCA) has asked Kingfisher Airline to submit a new action plan for its flight operation.
At the same time the aviation regulator has announced a new policy for slots allocation for all airlines. From now airlines will be disallowed allocation of slots on the basis of anticipated delivery of aircraft.
The Director-General, Mr E.K. Bharat Bhushan, told Business Line, "Kingfisher has replied to the show case notice. It says 30 planes will go for reconfiguration over next 3 months." The airline has assured that not more than 3 planes will be out of service at a time.
Even if three planes are taken out from the schedule, about 24 flights a day would need to be cancelled. So, the schedule will be disturbed at least for next four months.
In the mean time, the aviation regulator has also received response from Indigo and SpiceJet. Both were issued notices on Thursday evening for not operating flights as approved for the winter schedule. "We have reworked the slot policy," Mr Bharat Bhushan said.
Once an airline has everything ready, only then it can be given slots. Now any airline can ask for the slot, freed because of non utilisation by Kingfisher, Indigo and SpiceJet, Mr Bharat Bhushan added.
Keywords: Directorate General of Civil Aviation, Airline, Action Plan, aviation regulator
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Kingfisher mess: Govt steps in, banks may helpPublished on Fri, Nov 11, 2011 at 17:16 | Source : IBNLive.com
Updated at Fri, Nov 11, 2011 at 17:22
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New Delhi: Kingfisher Airlines, facing severe financial crunch, may finally get some help from the Government even as Civil Aviation Minister Vayalar Ravi on Friday ruled out any bailout package for the company. Sources say that Union Finance Minister Pranab Mukherjee may speak to banks to bailout the Vijay Mallya-owned airlines which is floating in the red and has been unable to even pay salaries for October to its employees.
"There is problem with aviation industry as a whole. The fuel price hike and the continuous sales tax imposition by the states is one of the major problems. Mallaya complained to me, he told me that HPCL had refused to give Kingfisher fuel last week," said Ravi.
Ravi suggested that the Finance Minister may ask the banks to give loan to Kigfisher Airlines to help it tide over the financial crunch.
Government of India has never said for a package. Even he (Mallya) has never asked for it, he never discussed it. The banks have to help him. We want them to fly. We hope the banks to help them," added the Civil Aviation Minister.
Banks had stopped giving loans to the Kingfisher which has suffered a loss of Rs 1027 crore in 2010-11 and has a debt of over Rs 7057 crore. The airline also owes more than Rs 200 crore to three oil companies - HPCL, IOC and BPCL - in dues. The oil companies have stopped granting credit to Kingfisher for lifting jet fuel and put it on a cash-and-carry payment mode.
The company's stocks were also hammered at the Bombay Stock Exchange on Friday and plummeted almost 19 per cent to an all-time low but recovered slightly later in the day.
Kingfisher has been forced to cancel several flights in the last few days leading to chaos and the airports and causing inconvenience to its passengers.
Even on Friday 50 pilots and cabin crew did not report for duty claiming sickness resulting in over 40 Kingfisher flights being cancelled. Nearly 130 pilots have quit Kingfisher in the last couple of days following non-payment of their salaries for the month of October.
Kingfisher has been forced to ground one third of its 66 aircraft fleet cancelling over 130 flights over the last three days.
"Decision to reschedule and cancel flights was taken to cut losses. We are only ensuring loss minimisation by flight rationalisation and enhanced revenue through reconfiguration," Mallya said on Thursday.
Meanwhile, there is more trouble for the airline after ground handling company Celebi threatened to stop servicing Kingfisher till outstanding dues are paid.
The DGCA had on Wednesday had issued a notice to Kingfisher under Rule 140 (A) of the Aircraft Rules, 1937 for not taking prior approval before cancelling flights.
Billionaire Mallya's Kingfisher Slumps on Flight Cuts, Call for India HelpBy Siddharth Philip and Karthikeyan Sundaram - Nov 11, 2011 6:15 PM GMT+0530
A Kingfisher Airlines Ltd. aircraft prepares to land in Mumbai, India. Photographer: Adeel Halim/BloombergKingfisher Airlines Ltd. (KAIR), controlled by billionaire Vijay Mallya, slumped in Mumbai trading after it cut flights and approached India's government for help as it works to restructure debt and pare losses.
The airline, India's second-biggest by market share, fell 9.5 percent to 19.65 rupees at close of trading in the city. The stock earlier plunged 19 percent, the most in three years. United Breweries (Holdings) Ltd., Mallya's holding company and Bangalore-based Kingfisher's biggest shareholder, fell 8.7 percent.
India's finance ministry may ask banks to help Kingfisher restructure its debt after the carrier sought the government's assistance, Civil Aviation Minister Vayalar Ravi said in New Delhi today. Kingfisher has scrapped 167 flights since Nov. 8 and some of its lessors plan to reclaim aircraft because of overdue fees, the Economic Times newspaper reported, without saying where it got the information.
"Unless there is an infusion of money at this point, I don't really see how it's going to survive," said Rishikesha Krishnan, a professor of corporate strategy at the Indian Institute of Management, Bangalore, who has written papers about Indian aviation. "That infusion of money has to come from Mallya. I can't see anybody else who's going to put money in."
New PlanesKingfisher has posted losses totaling more than 47 billion rupees ($935 million) over the last three years as it added new planes and competed against state-owned Air India Ltd. Earlier this year, it won as much as 12.1 billion rupees of new loans after banks agreed to convert 13 billion rupees of existing debt into preferred shares.
Jet Airways (India) Ltd., the nation's biggest, today separately reported a wider-than-estimated loss of 7.14 billion rupees for the quarter ended Sept. 30. Revenue rose 7 percent to 32.9 billion rupees, Jet Airways said in a statement.
Kingfisher will report quarterly earnings on Nov. 14, according to the BSE India website.
The airline isn't operating 36 percent of flights it has scheduled for the winter season, E.K. Bharat Bhushan, Director General of Civil Aviation, said in New Delhi. The slots at airports that Kingfisher isn't using will be given to other carriers, he said, without elaborating.
Prakash Mirpuri, a Kingfisher spokesman, said in a mobile- phone text message that he is on medical leave, and referred calls to Kingfisher's external public relations agency. Kingfisher Chief Executive Officer Sanjay Aggarwal didn't answer text messages and four calls to his mobile phone. Mobile phones of Mallya, the carrier's chairman and managing director, were switched off.
Jet, SpiceJetShares of Jet Airways and SpiceJet Ltd. (SJET), India's only listed discount carrier, gained in Mumbai after Bhushan's comments. Jet Airways rose 2.3 percent, erasing previous losses, while SpiceJet climbed 3.6 percent.
Kingfisher has about $1.5 billion of debt and a debt-to- asset ratio of 82, according to data compiled by Bloomberg. Jet Airways has a debt-to-asset ratio of 67, while SpiceJet has a ratio of 7.7.
Kingfisher and SpiceJet have tumbled 70 percent this year, while Jet Airways has dropped 65 percent as they struggle to turn surging travel demand into profit. Jet has posted losses for at least four years. The number of domestic passengers in India rose 18.6 percent this year through August to 39.6 million, according to the Director General of Civil Aviation.
Personal GuaranteesMallya, 55, doubled personal guarantees against the carrier's debt to 61.7 billion rupees in the year ended March, according to the airline's annual report. The carrier paid him 508.7 million rupees for loan assurances, according to the report, published in September.
United Breweries also more than doubled its debt guarantees to 168.5 billion rupees. The company, which owns 40 percent of Kingfisher, has dropped 71 percent this year.
Mallya formed Kingfisher Airlines in 2005, naming it after the beer UB Group brews under the Kingfisher brand. He handpicked each of the flight attendants and instructed them to treat passengers as "guests in my own home," according to a video shown on Kingfisher flights.
In 2008, Kingfisher completed a merger with Deccan Aviation Ltd., which operated India's first low-cost airline, Air Deccan. Kingfisher had a fleet of 66 planes ranging from Avions De Transport Regional turboprops to Airbus SAS A330s as of March 31, according to its annual report.
Airbus A380The carrier has also ordered five Airbus A380 planes, which it expects to start taking delivery from 2016.
Mallya inherited the UB Group from his father in 1983 at the age of 27. He has since built United Breweries Ltd. (UBBL) into India's biggest brewer and United Spirits Ltd. acquired brands including Whyte & Mackay.
The billionaire also has a stake in a Formula One team and owns Indian Premier League cricket team Royal Challengers Bangalore. In October, he sold a 42.5 percent stake in his Formula One team to India's Sahara Group for $100 million.
Mallya had a net worth of $1.1 billion, and was ranked 49th among India's billionaires, according to Forbes magazine.
To contact the reporter on this story: Siddharth Philip in Mumbai at firstname.lastname@example.org; Karthikeyan Sundaram in New Delhi at email@example.com
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Kingfisher shares nosedive to all-time lowBy Rupesh Subhash Janve Nov 11 2011 , Mumbai
Tags: All-TIme Low, Kingfisher Airlines, shares, News
Kingfisher Airlines shares plunged 19 per cent to touch an all-time low of Rs
17.55 per share on Bombay Stock Exchange on Friday's intra-day trading as the cash strapped air carrier struggled with mass resignations of pilots and flight cancellations.
The airline has sought government help for a bailout similar to that provided to Air India. The Kingfisher stock finally closed at Rs 19.65 per share, down 9.45 per cent from the previous day's close.
On Friday, around 50 pilots and cabin crew failed to turn up for duty, leading to cancellation of over 40 flights across its network. Passengers across the country cancelled Kingfisher tickets to switch to other airlines, and paid 20-40 per cent higher at the last moment.
Vijay Mallya, chairman, Kingfisher got in touch with finance minister Pranab Mukherjee and civil aviation minister Vayalar Ravi to help the airline infuse funds through banks at low interest rates, besides other concessions in line with what Air India was getting, a senior government official in the know told Financial Chronicle. The civil aviation minister told PTI the government might speak to banks for a possible bailout of Kingfisher Airlines, but a debt recast like Air India is not possible.
Sanjay Aggarwal, CEO of Kingfisher Airlines, said in a statement that the airline will operate 300 daily flights connecting 54 cities as per the revised schedule compared to its previous schedule of 340 flights. "The cancellation of flights was part of route rationalisation to improve profitability and revenue productivity of the flights," he said. The airline apologised to the Directorate General of Civil Aviation (DGCA) for not informing it about the cancellations.
On alleged exodus of pilots and cabin crew from the airline, he said, "The attrition of 100 pilots did not happen overnight." The airline has over 650 pilots on the rolls.
Anup Kanunga, former chairman – western region, Travel Agents Association of India, told FC that air fares are up 15-20 per cent across most segments. "On certain routes the rates have peaked."
Analysts said some of public sector banks participated in the debt-recast package in November last year. The airline implemented a debt-recast package under which debt of Rs 1,400 crore and approximately Rs 745 crore were converted into share capital. Lenders, including state-run banks had to convert the debt of Rs1,400 crore into equities at a premium of 60 per cent at Rs 64.48 per share to Kingfisher's market price of Rs 39.9 a share in April 2011. Considering Kingfisher's closing price of Rs 19.85 per share on Friday the lenders already have lost Rs 44.63 per share in the company.
11 NOV, 2011, 08.15AM IST, ET BUREAU
Angry lessors of Kingfisher Airlines plan to seize aircraft; financial situation worsens
- Kingfisher Airlines defends viability; shares slump on concerns
- Kingfisher Airlines crisis: 130 pilots quit, 149 flights cancelled
- Kingfisher Airlines chairman Vijay Mallya to mortgage Kingfisher Towers?
Kingfisher Airlines Ltd.
Vol:7265276 shares tradedNSE
Vol:24728870 shares traded
MUMBAI: Some lessors of Kingfisher Airlines are planning to take back aircraft they had given on lease as the Vijay Mallya-promoted company faces its biggest crisis amid questions over strategy and a nationwide furore over mass cancellation of flights for the third straight day.
The lessors (lenders who arrange long-term leases for companies) have been negotiating with Kingfisher for the past few days after the airline defaulted on payments on some aircraft due to a worsening financial situation, exacerbated in recent months by rising fuel costs and intense price war.
Unable to secure money from lenders or the equity markets and fast running out of cash to pay for fuel supplies, Kingfisher on Thursday continued to cancel flights for the third day. The airline, according to some estimates, is losing Rs3-4 crore a day, which is approximately Rs 100-120 crore per month.
Travel agents, government officials and Kingfisher executives said over 167 flights have been cancelled since Tuesday. The Director General of Civil Aviation(DGCA) has issued a notice to the airline, demanding an explanation.
Kingfisher has responded by saying the airline is restructuring its operations after deciding to discontinue the low-fare, no-frills business last month. "No shutdown, only ensuring loss minimisation by a flight rationalisation and enhanced revenue through reconfiguration of aircraft," Chairman Vijay Mallya told ET.
"This is a terrible time to cancel flights as we are entering peak travel season and the demand is very high, which other airlines will not be able to fully cater to," travel technology solutions conglomerate Bird Group ED Ankur Bhatia said.
A Delhi-Bangalore flight that used to cost Rs 10,000-17,000 on current booking is now costing Rs 13,000-31,000. But the bigger problem for Kingfisher will be aircraft availability rather than DGCA missives. The airline has already given back about 14 narrow-body A320 aircraft since March this year due to cash burn, leaving it with only 20 planes.
Unlike ATRs, A320s can ferry more passengers and cover longer routes. The airline may find it difficult to cover all major cities, analysts said. It has also grounded about eight ATRs, the turboprop aircraft that was earlier used for Kingfisher Red operations, on maintenance and overhaul and lease rental payment issues.
Repossession to worsen situation
No additions to the fleet have been made for a year now and capacity in the domestic market has also been reduced by 15% through constant cancellations in the past four months. But what has shaken the confidence of investors, lenders and other stakeholders is that about 50 flights have been cancelled every day in the past three days.http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/angry-lessors-of-kingfisher-airlines-plan-to-seize-aircraft-financial-situation-worsens/articleshow/10684863.cms
11 NOV, 2011, 10.02AM IST, SAURABH SINHA,TNN
Kingfisher Airlines crisis: 130 pilots quit, 149 flights cancelledNEW DELHI: The actual reason for the huge chaos among Kingfisher flyers across India became apparent on Thursday as the airline put its figures on the table.
While Kingfisher claimed it was cancelling 50 flights every day till November 19, in reality, it operated only 269 flights of its allocated winter schedule of 418 daily flights on Thursday.
A shocking 149 flights - 36% of its daily allocated schedule - were not operated. Officially, Kingfisher has said that it has cancelled flights to reconfigure its Airbus A-320 aircraft. However, it is learnt that around 130 pilots have quit the cash-strapped carrier in the past few weeks. Also, airport operators, oil companies and vendors of all imaginable items have massive dues running with Kingfisher and are demanding that ownerVijay Mallya pay up. Given the shortage of crew and funds, the airline has truncated its schedule, perhaps opting to "fly less and spend less".
When contacted in Dubai, Mallya did not comment on the disparity in the cancellations. He is learnt to have assured the Directorate General of Civil Aviation (DGCA) that he would explain the cancellations. The truth on Kingfisher's actual operations came to light asDGCA directed all the airlines to submit the actual number of flights they would operate on Thursday against their winter schedule quota.
Only Air India, Alliance Air, Jet Airways, JetLite and Go Air were found to have operated all their flights. IndiGo and SpiceJet operated around 30 flights lesser than their allocation. IndiGo clarified that it had not cancelled any flight.
"The winter schedule is for flights up to March 2012. As we induct seven more aircraft into our fleet (by) March 2012, we will add more flights to fulfil all our winter schedule approvals," the airline said in a statement.
Besides the DGCA scrutiny, Kingfisher faces the threat of unpaid aircraft leasing companies seeking the return of their planes. Spare part vendors too - like other creditors - want their past dues to be cleared along with current ones. "In its current health, Kingfisher has two options - shut down or downsize significantly to survive for some time till either the environment improves or a suitor is ready to buy the airline," a highly placed industry source said.
10 AUG, 2011, 04.45PM IST, PTI
Maximum Air India flight cancellations in 2011
Civil Aviation Minister Vayalar Ravi, while responding to a written reply in Lok Sabha, however, attributed the cancellations to the pilot strike from April 27 to May 6.
He said the major cancellations, 2753, happened because "Air India had 740 and 1,848 cancellations in April and May, 2011 primarily due to pilot strike from April 27 to May 6, 2011."
"Scheduled airlines generally operate their flights on approved schedules. However, at times the flights are cancelled due to watch hour restrictions, weather, technical reasons beyond the control of the airlines," Ravi said.
Directorate General of Civil Aviation (DGCA) has issued Civil Aviation Requirements (CAR), (an application format) which provides for compensation and facilities to the passengers in case of denied boarding, cancellations and delays.
"The CAR is available on DGCA website dgca.nic.in. All the airlines are providing compensation and facilities to the affected passengers in accordance applicable provisions of the CAR," he said.
The carriage by air is a contractual matter between the passenger and the carrier. The complaints are filed with the airlines by the passenger. However, some passengers choose to take up the matter with DGCA, which are taken up with the airlines for redressal, he added.
31 OCT, 2011, 06.43PM IST, IANS
Kingfisher Airlines' debt should be seen in comparison to size: Vijay Mallya
NEW DELHI: Kingfisher Airlines' debt should be seen in comparison to the company's size, chairman Vijay Mallya said Monday, adding that the carrier has nine years to repay its dues.
"You should see the debt in comparison to our size. We have nine years to repay it," Mallya told reporters on the sidelines of an industry event here.
According to Mallya, while the company's debt was manageable, the rising interest cost was a cause of concern.
"The rising interest rate is a cause of concern."
The airline, which has a Rs.6,000 crore debt, took various steps like hiving off low-cost operations and restructuring a part of its debt.
The airline also has plans to raise $250 million through a Global Depository Receipt (GDR) issue.
The airline's fuel supply was recently halted byHindustan Petroleum for a few hours after its dues touched Rs.650 crore.
The Department of Industrial Policy and Promotion(DIPP) under the commerce ministry has floated a draft cabinet note on allowing FDI up to 26 per cent stake in domestic airlines.
Meanwhile, Civil Aviation Secretary Nasim Zaidi said that the government was in the process of reviewing the FDI policy for domestic airlines.
"The government is in the process of reviewing the existing FDI policy framework," Zaidi said at the CII event.
Zaidi further said that the government is aware of the concerns raised by the sector, in the backdrop of domestic airlines' expected losses of Rs.3,500 crore in the first six months of this fiscal.
"The government is aware of the concerns and is looking into all aspects that have the potential of ensuring rapid, inclusive and sustainable growth of the industry," he added.
24 OCT, 2011, 07.41AM IST, ET BUREAU
Cabinet to consider proposal to allow foreign airlines to invest in domestic carriers24 OCT, 2011, 07.41AM IST, ET BUREAU
Cabinet to consider proposal to allow foreign airlines to invest in domestic carriers
Read more on »Vijay Mallya's Kingfisher Airlines|Singapore Airlines|PricewaterhouseCoopers|Indigo|ICICI Direct|Department of Industrial Policy and Promotion
- It makes sense to allow foreign airlines to invest in Indian ones
- Finance ministry puts its foot down, says no FDI cap in pharmaceuticals sector
- Ministers' panel to look into FDI in pharma sector
- Kingfisher Airlines' debt should be seen in comparison to size: Vijay Mallya
- Removal of FDI cap up to 49% to encourage invest
NEW DELHI: The Cabinet will shortly consider a proposal to allow foreign airlines to invest in domestic carriers, a move that could offer a breather to cash-strapped companies.
The industry ministry has circulated a draft cabinet note for inter-ministerial consultation after a nod from the civil aviation ministry. "Though the aviation ministry has given an in-principle approval, the sectoral cap will be decided by the Cabinet," said an official of theDepartment of Industrial Policy and Promotion (DIPP), which frames policy on foreign direct investment.
While DIPP favours a 26% cap on foreign airlines' holding, the aviation ministry wants it restricted to 24%. A holding above 25% gives the right to block a 'special resolution'.
India allows 49% FDI in airline companies, but foreign airlines have been banned from investing in the sector. "No foreign airline would be allowed to participate directly or indirectly in the equity of an air transport undertaking engaged in operating scheduled and non-scheduled air transport services, except cargo airlines," the current policy says.
According to industry estimates, private domestic airlines have run up losses of more than 3,500 crore in the first half of the current fiscal year. Some, like Vijay Mallya's Kingfisher Airlines, desperately need capital to pay off debt. Budget airline IndiGo is the only carrier making profits while state-owned Air India has the highest losses. Experts say the situation may remain the same for most carriers in the coming quarters.
"This quarter is going to be very bad compared with last year because of supply addition by low-cost airlines, competition, high fuel prices and rupee depreciation," said Rashesh Shah, analyst at brokerage firm ICICI Direct. "For this fiscal, all of them will make a loss."
India has five big private operators and a loss-making national carrier, Air India. Although domestic air traffic has been growing at near 20% due to a rising middle class, some carriers have been faring poorly and find it difficult to raise capital in a restrictive FDI regime.
In the past, opposition to FDI in aviation has largely come from some private airlines. In the mid-1990s, a proposal from Singapore Airlines to form a venture with Tatas was put on hold by successive governments. The two also had to abandon a joint effort to pick up a stake in Air India in 2001.
This time, however, the aviation ministry has favourably replied to DIPP's letter to allow foreign airlines to pick up minority stakes, though it wants the regime to be more restrictive.
But the DIPP official said any cap below 26% would serve no purpose and no foreign firm would be interested in investing. The department, under the industry ministry, is keen on allowing at least 49% FDI in all sectors and had even floated a discussion paper on the issue earlier.
"We can expect strategic M&As in the near future and the sector shall benefit from both capital inflows and technology collaborations," said Akash Gupt, executive director, PricewaterhouseCoopers.
8 NOV, 2011, 06.29AM IST, ANINDYA UPADHYAY,ET BUREAU
Why only a Satyam-like restructuring can save Air India from losses and mounting debt
There was no expectation this time. When a group of ministers (GoM) met last month on a 'turnaround plan' for shipwrecked Air India, it barely drew the attention an endeavour to save the country's number one aviation asset would.
So many times has Air India been through a cycle of destruction - airline messes up, government disassociates itself, losses and debt mount, government steps in, heads roll, government cobbles up new plan - that any intention to heal draws more mirth than sympathy, ridicule than belief.
Belief is in short supply in the government too - the latest plan has been in the works for about nine months now. As are business ideas and political will. The latest plan, like the three that preceded it, is to grease the airline's operations with cash. This is an operation that, in 2009-10, lost Rs 5,500 crore on revenues of Rs 13,100 crore and can't service its Rs 43,000 crore debt.
Yet, the GoM wants to infuse Rs 23,000 crore - of taxpayer money - into Air India by 2020, starting with Rs 6,500 crore this year. It also wants to restructure Rs 22,000 crore of its loans and give the airline a breather on repayment, for which it has sought a view of the banking regulator. In other words, the GoM, headed by finance minister Pranab Mukherjee, hopes that more cash will revive the airline.
"That's the problem," says aviation analyst Kapil Kaul. "The airline needs a financial restructuring plan, but a credible and comprehensive business plan, spread over five to 10 years, must come first." All turnaround efforts have been either silent or have not addressed the business plan adequately.
Such a plan should cover how much Air India will fly, how it will source its planes, what will it do with employees surplus to needs, how will it improve service and market share, will it join a global alliance, what ancillary activities it will focus on and what it will let go...Put another way, how will it restructure its operations, which are all over the place?
For example, Air India has 38,000 employees - about three times the industry norm - and they reside in two camps that don't get along. Or, despite accumulated losses of Rs 13,000 crore, it has committed to spending about Rs 20,000 crore to buy 27 Dreamliners from Boeing in the next few years.
8 NOV, 2011, 09.22AM IST, SAURABH SINHA,TNN
Kingfisher's 15-crore cheque to AAI bounces
NEW DELHI: Cash-strapped Air India and Kingfisherare fast becoming flashpoints with unpaid employees and vendors. Last week, a Rs 15-crore cheque issued by Kingfisher to Airports Authority of India (AAI) bounced following which the state-run airport operator put the airline back on daily cash-and-carry.
Since this move threatened to completely disrupt Kingfisher's schedule that is already feeling the heat with pilots quitting, AAI started accepting some part payment but has called airline top brass to make its stand clear on the over Rs 200 crore dues now. The airline did not offer comment on this issue.
AAI's dues from AI, on the other hand, are now inching to the Rs 1,000-crore mark with the figure climbing to Rs 950 crore, said a senior official. While being a sister public sector unit run by the same parent aviation ministry, AAI can do nothing about AI.
The Maharaja's long unpaid employees, however, are now seething with anger and the airline may well be headed for a serious round of industrial action due to the government's complete failure in undoing the damage its controversial decisions caused to AI-IA combine earlier.
"For five months we have not been paid our allowances that account for 80-85% of the total salary. For instance, a commander in erstwhile Indian Airlines has a monthly package of Rs 3.5 lakh - Rs 30,000 in basic and HRA and the rest allowances. Frustrated employees could soon resort to mass sick leave or some other action. Unpaid employees are bearing the brunt of wrong decisions taken by UPA-1," said a long time employee.
A top airline official said employees would be paid one month's salary and allowance by this weekend. "We have to pay Rs 209 crore to oil companies by 4 pm on Tuesday. After that we have about Rs 200 crore that would be paid as one month's salary and allowance by this Friday or Saturday," said the official.
Going unpaid on Diwali too hasn't gone down well with employees and the unrest is fast assuming alarming proportion over the growing uncertainty on salary payment. The government's 'balm' to AI employees of removing an unpopular chairman and MD did for work for some time but now the staffers are up in arms over going unpaid for so long.
"The government should now tell us if it can run the airline. Else it must give us clearance to leave," said a senior pilot.
8 NOV, 2011, 10.57AM IST, REUTERS
Kingfisher Airlines to cancel 31 flights daily till November 19: Report
MUMBAI: India's No. 2 carrier Kingfisher Airlines, controlled by liquor baron Vijay Mallya, plans to cancel 31 flights daily till Nov 19, including four international flights to Bangkok, the Mint newspaper reported, citing an unnamed airline official.
The cash-strapped carrier, which has not reported a profit ever since it got listed and has undergone debt restructuring Once, has decided to cancel 27 domestic flights, the paper said, without specifying a reason.
The cancellations include Delhi, Mumbai, Bangalore, Chennai, Kolkata and Hyderabad routes, the report said.
About a dozen of Kingfisher's aircraft are already out of service because of maintenance and other issues, the report said.
Kingfisher had cancelled around 20 flights from Delhi on Monday, due to a lack of aircraft, a Delhi airport official who declined to be named, said.
Kingfisher Airlines officials and a spokesman were not immediately available for comment when contacted by Reuters.
On Oct. 13, the airline had faced a disruption in flights after state-run oil marketer HPCL temporarily halted fuel supplies, citing non-payment of dues.
Last week, Kingfisher said it has sought further cushion from banks to ease its debt burden, but denied it was seeking another debt restructuring.
Earlier, Kingfisher's auditors raised questions about its viability and said it needed capital infusion to survive.
Shares in Kingfisher, valued at about $240 million, have lost 64 percent of its value so far this year. At 10:45 a.m. (0515 GMT), the stock was down 0.85 percent at 23.45 rupees in a choppy Mumbai market.
10 NOV, 2011, 09.14AM IST, TNN
Flyers fume as Kingfisher cancels 50 flights a dayNEW DELHI/BANGALORE/MUMBAI: Thousands of air passengers across the country found their travel plans in disarray when cash-strapped Kingfisherairline said it was cancelling 50 flights every day starting Wednesday, up from 34 announced a day earlier.
As of now, these flights - all domestic except a couple of international ones - would remain cancelled till November 19. The airline said in a couple of days, it would give details of cancellations to take place in the coming weeks. Adding to the disruption was a series of delays in Air India flights, attributed by the airline to staff shortage.
As passengers were not informed in time about the Kingfisher cancellations, there was chaos at airports across the country. Caught off-guard, many passengers were grounded while others hurriedly rebooked on other airlines paying a premium of up to 20%.
The Directorate General of Civil Aviation has sent Kingfisher a notice over the sudden cancellations and asked it to respond by Thursday, following which the aviation authorities will determine the action to be taken against the airline.
10 NOV, 2011, 10.53PM IST, PTI
Kingfisher faces more turbulence, over 30 flights cancelled
NEW DELHI: Cash-strapped Kingfisher Airlines got into more turbulence today by cancelling over 30 flights for the fourth consecutive day even as some pilots and cabin crew did not turn up for duty by reporting sick.
Thousands of passengers across the country were inconvenienced by the cancellation of flights and in some cases paid a premium of 20-40 per cent to travel by other airlines.
Over the past four days, the Vijay Mallya-owned airline has cancelled more than 120 flights maintaining they were taking some aircraft off their schedule to addbusiness class seats in them.
Airline sources said 30-odd pilots and cabin crew have not reported for duty in the past few days on grounds of sickness, but discounted reports that 100 pilots had quit the airline recently. The payment of October salary and allowances of the airline staff has been delayed.
The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7057.08 crore.
Kingfisher's flight schedules have also been severely hit with three oil companies -- HPCL, IOC and BPCL--stopping granting credit to it for lifting jet fuel and asking it to make payments on a daily basis.
Industry sources said the airline has grounded eight of its leased turboprop ATR aircraft.
The cash-strapped carrier also has unpaid dues to the operators of airports and other agencies, which have been putting pressure on it.
The Directorate General of Civil Aviation (DGCA) had yesterday issued a show-cause notice to Kingfisher asking why it had not taken the regulator's prior approval to curtail its flight schedules as required by the Aircraft Rules, 1937.
Officials said the airline is yet to reply to the notice but added that a reply was expected in a couple of days.
8 NOV, 2011, 07.26PM IST, PTI
Non-payment of dues to oil companies hits Kingfisher Airlines schedulesNEW DELHI: Kingfisher Airlines cancelled at least 34 flights on various sectors today as non-payment of dues to oil companies hit its schedules across the country and the Vijay Mallya-owned carrier grounded at least six of its turboprop ATR aircraft.
At least 34 flights across the country, including nine flights to and from Delhi, and those to Bangkok from Delhi and Mumbai were cancelled.
Airline officials maintained these were planned cancellations and such an exercise would continue "for a limited period".
At least six turboprop ATR-72 aircraft have been grounded as jet fuel supplies were stopped by state-run HPCL as the airline owes about Rs 600 crore to it, aviation sources said.
The BPCL is also not supplying fuel to the airline following an ongoing court case over alleged non-payment of about Rs 250 crore dues.
Indian Oil Corporation has stopped credit to the airline and put it on a cash-and-carry mode, implying that it would have to pay for fuel on a daily basis.
In a statement, the airline said it has "reduced frequency on some of its flights, which are predominantly over weekends or on some routes where there has been slow demand."
"For a limited period, these flights are either being cancelled or clubbed with other Kingfisher flights in a well- controlled pre-determined manner," the statement said.