The Airports Authority of India (AAI) has encashed a bank guarantee of R100 crore of Kingfisher Airlines after the latter failed to clear airport charges to the tune of R250 crore. Airport charges include landing, parking and air navigation charges which the airlines pay to AAI.
Kingfisher Airlines is the only private scheduled carrier to have defaulted on payment of such charges along with the state-owned Air India, which owes about R720 crore.
?We have encashed their guarantee and put them on cash-and-carry basis,? a senior AAI official told FE. The cash-and-carry mode requires the company to pay upfront for using its infrastructure.
The official added that AAI was left with no option but to encash bank guarantee since the company did not clear the outstanding dues in spite of several notices and reminders.
When contacted a Kingfisher Airlines spokesperson said, ?As a matter of policy we do not comment on or discuss supplier and partner relationships in the public domain.?
Faced with liquidity crunch Kingfisher Airlines has decided to launch $300 million GDR (global depository receipt) issue and is in talks with a clutch of investors for the same. The airline which posted a net loss of R1,027 crore in 2010-11 is saddled with a debt of R6,000 crore.
The airline is banking on fresh funds to clear its dues, which have resulted from operating losses. It has started several international flights, which would take a while to break even.
?While Kingfisher has managed to hold on its market share it needs to put greater emphasis on cost management. We, however, expect the airline to cut its losses significantly in the current financial year since the new team under CEO Sanjay Aggarwal is taking lot of measures to improve efficiency,? Amber Dubey, director (aerospace & defence) at consultancy firm KPMG, said.
Kingfisher operates to 59 domestic and eight international destinations daily with nearly 400 flights. It has a fleet of 66 aircraft comprising regional jet ATRs, A320s and A330s.
The company has been keen on raising equity-based funds from the market but has not succeeded so far due to adverse market conditions. Rising fuel price and low passenger yields have reduced investor appetite in the sector.